Should low-wage workers care about where they work? Assessing the impact of employer characteristics on low-wage mobility

Nicole Guertzgen () and Anja Heinze

No 10-054, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper studies the importance of employer-specific determinants in escaping low earnings in Germany. To address the initial conditions problem and the endogeneity of employer retention, we model (intra-firm) low-pay transitions using a multivariate Probit model that accounts for selection into low-wage employment and non-random employer drop-out. Using data from the LIAB Linked Employer-Employee panel, our results indicate that for male workers from the service sector the probability of escaping low-pay increases with employer size. This contrasts with female workers from the service sector, who rather benefit from collective bargaining coverage and local works councils. These findings are consistent with internal labour markets being an important ingredient of male within-firm wage growth, whereas the removal of asymmetric information appears to be more relevant in explaining female workers' wage transitions.

Keywords: wage mobility; trivariate probit; linked employer-employee data (search for similar items in EconPapers)
JEL-codes: C23 J31 J51 L13 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (6)

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Journal Article: Should Low-Wage Workers Care About Where They Work? Assessing the Impact of Employer Characteristics on Low-Wage Mobility (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:10054

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