Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/242564 
Authors: 
Year of Publication: 
2018
Series/Report no.: 
Economics Working Paper Series No. 2018/08
Publisher: 
Auckland University of Technology (AUT), Faculty of Business, Economics and Law, Auckland
Abstract: 
Are low wages a way for the unemployed to switch to higher-paying jobs? Using data from the British Household Panel Survey (BHPS), the labour market dynamics of unemployed, low-paid, and higher-paid employed men are analysed. Moreover, the respective (un)employment duration and occupational skill level are accounted for. Results show that in general low wages significantly reduce the risk of future unemployment and increase the chances of ascending the salary ladder, especially in the case of long-term unemployment (>360 days). Furthermore, the occupational skill level has a substantial influence on the upward mobility of low-paid jobs: individuals working in the initial period in a low-paid and higher-skilled occupation have on average an 11 percentage points higher probability of entering higher pay compared to when working in a low-paid and low-skilled occupation.
Subjects: 
unemployment dynamics
low-pay dynamics
intial conditions problem
random-effects probit models
maximum simulated likelihood
JEL: 
J64
J62
J31
Document Type: 
Working Paper

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