Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215292 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 12896
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Estimating economic earnings mobility is imperative for understanding the degree to which low pay employment is a temporary or long-term position. The current literature estimates transition probabilities between low and higher pay. This study extends the focus to identify the underlying pecuniary wage change via construction of an intermediate pay zone marginally above low pay. Utilising monthly administrative data we find that individuals with a strong attachment to the low pay sector have a very low probability of shifting into higher pay. Further, these individuals also have a substantially greater risk of experiencing a low pay-no pay cycle relative to those who are intermediate or higher paid. Notably, this finding is only uncovered using within year variation in wages to reveal intensity of labour market attachment.
Subjects: 
low pay dynamics
transition probability
state dependence
dynamic models
administrative data
JEL: 
J62
J31
C33
C55
Document Type: 
Working Paper

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