EconPapers    
Economics at your fingertips  
 

Human Capital Formation and Changes in Low Pay Persistence

Kabir Dasgupta (kabirdasgupta27@gmail.com) and Alexander Plum

No 2020-15, Working Papers from Auckland University of Technology, Department of Economics

Abstract: This study aims at understanding how persistence in low pay changes over time. In particular, we extend the existing literature on human capital formation by documenting heterogeneity in low pay persistence by age and human capital level. We utilise population-wide tax ecords to track monthly labour market trajectories of workers who are observed in low paid employment during the initial period of analysis. Performing age- and qualification-specific regressions, our empirical findings indicate that low pay persistence reduces with time. However, the magnitude is highly heterogeneous acorss the workforce. For a qualified worker in their early 20s, the risl of staying on low-pay declines by, on average, 5 to 10% points after one year - while for a worker in their 50s, independent of their qualification level, persistence remains almost unchanged. We find a strong association between decline in low-pay persistence and the firm's average wage level.

Keywords: low pay; human capital formation; state dependence; random-effects probit; intital condition; unobserved heterogeneity (search for similar items in EconPapers)
JEL-codes: J24 J61 J63 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-hrm and nep-lab
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aut.ac.nz/__data/assets/pdf_file/0008/436184/working-paper-20_15.pdf (application/pdf)

Related works:
Journal Article: Human capital formation and changes in low pay persistence (2023) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aut:wpaper:202015

Access Statistics for this paper

More papers in Working Papers from Auckland University of Technology, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Gail Pacheco (gail.pacheco@aut.ac.nz).

 
Page updated 2024-12-28
Handle: RePEc:aut:wpaper:202015