Mosthaf, Alexander Schank, Thorsten Schnabel, Claus
Year of Publication:
[Journal:] IZA Journal of European Labor Studies [ISSN:] 2193-9012 [Volume:] 3 [Year:] 2014 [Issue:] 21 [Pages:] 1-17
Using German SOEP data, 1999 - 2009, this study analyzes state dependence in low-wage employment of western German women, where we distinguish between full-time and part-time working. We estimate a dynamic multinomial logit model with random effects and find that having a low-wage job - compared to having a high-wage job - ceteris paribus decreases the probability of being high-paid in the future. This negative effect is significantly larger for part-time jobs than for full-time jobs. We find mixed evidence for a low-pay-no-pay cycle: compared to being high-paid, having a low-paid job increases the risk of being unemployed in the next period only for part-time workers. However, concerning future wage prospects low-paid women are clearly better off than unemployed or inactive women. We argue that for women low-wage jobs can serve as stepping stones out of unemployment and are to be preferred to staying unemployed and waiting for a better job.
Low-pay dynamics State dependence Dynamic multinomial logit model