Low-pay work in Europe: dynamics, evolution and the role of institutional factors

Chiara Mussida and Dario Sciulli

International Journal of Manpower, 2025, vol. 47, issue 10, 1-17

Abstract: PurposeThis paper investigates the temporary or persistent nature of low-pay work in Europe. The evolution over time of low-pay state dependence is explored by considering relevant subperiods. The role of institutional factors is also examined.Design/methodology/approachThe analysis is based on longitudinal sections of the European Union Statistics on Income and Living Conditions survey covering the 2003–2020 period. The authors adopt a dynamic framework to characterize the possible transitory or permanent nature of low-paying jobs. To better identify mobility and persistence, they consider the entire spectrum of labor market outcomes (non-employment, low-pay work and high-pay work), thus adopting a multinomial logit specification. The issue of initial conditions is addressed and correlated random effects are assumed.FindingsThe authors find that being employed, either in low-paying or standard/high-paying job, might be considered a protective factor against the risk of nonemployment. They find evidence of genuine state dependence in the majority of countries explored, with important changes in magnitude. Several countries experienced a strengthening of persistence overtime in low-pay work. Some institutional factors, such as higher minimum wage and expenditure on labor market policies, might play a role in the reduction of the persistence in low-pay conditions.Originality/valueThe paper stresses the relevance of exploring the entire spectrum of labor market outcomes when analyzing the transitory/permanent nature of low-pay work. It provides novel evidence on the evolution of persistence in low-pay jobs and the role of institutions in Europe.

Keywords: Europe; Dynamic model; Persistence; Institutional factors; Low pay work (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:ijm-04-2025-0308

DOI: 10.1108/IJM-04-2025-0308

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