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When there is no way up: Reconsidering low-paid jobs as stepping stones

Gail Pacheco () and Alexander Plum ()
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Alexander Plum: NZ Work Research Institute, Faculty of Business, Economics and Law at AUT University

No 2020-08, Working Papers from Auckland University of Technology, Department of Economics

Abstract: Several studies have shown significant persistence in low pay, along with a greater probability of moving out of low pay and into higher pay in the future. Low-paid jobs are therefore often deemed stepping stones, rather than dead-ends. However, using point-in-time information past literature has usually only considered changes in labour market status at the annual level and not accounted for within-year changes of an individual’s low pay position. Using population-wide administrative data with monthly earnings information, this study accounts for changes in an individual’s low pay position and shows that attachment to the low pay sector is highly heterogeneous. The empirical evidence points to workers that have a strong attachment to the low pay sector facing a very high probability of staying low-paid employed; and the likelihood of their low pay jobs being stepping stones towards higher pay are found to be negligible.

Keywords: low pay; pay persistence; dynamic random effects models; administrative data (search for similar items in EconPapers)
JEL-codes: C33 C55 J31 J62 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-lma
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Journal Article: When There is No Way Up: Reconsidering Low‐paid Jobs as Stepping‐stones (2021) Downloads
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