Escaping from Low-Wage Employment: The Role of Co-worker Networks

Anna Baranowska-Rataj (), Zoltán Elekes () and Rikard Eriksson ()
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Zoltán Elekes: Agglomeration and Social Networks Research Group, Centre for Economic and Regional Studies and Department of Geography, UmeA University
Rikard Eriksson: Department of Geography, Umea University and Centre for Regional Science, Umea University

No 2123, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: Low-wage jobs are often regarded as dead-ends in the labour market careers of young people. Previous research focused on disentangling to what degree the association between a low-wage job at the start of working life and limited chances of transitioning to better-paid employment is causal or spurious. Less attention has been paid to the channels that may facilitate the upward wage mobility of low-wage workers. We focus on such mechanisms, and we scrutinize the impact of social ties to higher-educated co-workers. Due to knowledge spillovers, job referrals, as well as firm-level productivity gains, having higher-educated co-workers may improve an individual’s chances of transitioning to a better-paid job. We use linked employer-employee data from longitudinal Swedish registers and panel data models that incorporate measures of low-wage workers’ social ties to higher-educated co-workers. Our results confirm that having social ties to higher-educated co-workers increases individual chances of transitioning to better-paid employment.

Keywords: co-worker networks; employer-employee data; low-wage; wage mobility (search for similar items in EconPapers)
JEL-codes: C23 D85 J24 J31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021-05
New Economics Papers: this item is included in nep-eur, nep-hrm, nep-lma, nep-net and nep-ure
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