The Inter-related Dynamics of Unemployment and Low Pay

Mark Stewart

No B2-4, 10th International Conference on Panel Data, Berlin, July 5-6, 2002 from International Conferences on Panel Data

Abstract: This paper examines the extent of state dependence in individual unemployment and low paid employment and the inter-related dynamics between the two. Evidence is presented that (after controlling for unobserved heterogeneity and initial conditions) the low paid are more likely to become unemployed and the unemployed more likely to be low paid on re-entry to employment. The impacts of unemployment and low pay are found to be insignificantly different from one another, both on the probability of unemployment in the next period and on the probability of low pay. Evidence is presented that low paid jobs act as the main conduit for repeat unemployment and considerably increase its probability. Those who get a better paid job eliminate the increased risk of repeat unemployment.

Keywords: unemployment; low pay; dynamics; state dependence; unobserved heterogeneity; wage mobility; dynamic random effects models; repeat unemployment; recurrent unemployment. (search for similar items in EconPapers)
JEL-codes: J31 J64 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (28)

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