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Low-Wage Employment versus Unemployment: Which One Provides Better Prospects for Women?

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  • Mosthaf, Alexander

    (University of Mainz)

  • Schank, Thorsten

    (University of Mainz)

  • Schnabel, Claus

    (University of Erlangen-Nuremberg)

Abstract

This study analyzes state dependence in low-wage employment of western German women using GSOEP data, 2000-2006. We estimate dynamic multinomial logit models with random effects and find that having a low-wage job increases the probability of being low-paid and decreases the chances of being high-paid in the future, in particular for low-paid women working part-time. 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.

Suggested Citation

  • Mosthaf, Alexander & Schank, Thorsten & Schnabel, Claus, 2009. "Low-Wage Employment versus Unemployment: Which One Provides Better Prospects for Women?," IZA Discussion Papers 4611, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4611
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    Cited by:

    1. Claus Schnabel, 2021. "Low-wage employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 276-276, March.
    2. Plum, Alexander & Knies, Gundi, 2015. "Does neighbourhood unemployment affect the springboard effect of low pay?," ISER Working Paper Series 2015-20, Institute for Social and Economic Research.
    3. Lixin Cai, 2015. "The dynamics of low pay employment in Australia," International Journal of Manpower, Emerald Group Publishing Limited, vol. 36(7), pages 1095-1123, October.
    4. Hirsch, Boris & Schnabel, Claus, 2011. "Let's take bargaining models seriously: The decline in union power in Germany, 1992 - 2009," FAU Discussion Papers in Economics 10/2011, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    5. Stephani, Jens, 2012. "Wage growth and career patterns of German low-wage workers," IAB-Discussion Paper 201201, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Andreas Knabe & Alexander Plum, 2013. "Low-wage Jobs — Springboard to High-paid Ones?," LABOUR, CEIS, vol. 27(3), pages 310-330, September.
    7. Mosthaf, Alexander & Schank, Thorsten & Schwarz, Stefan, 2021. "Do Supplementary Jobs for Welfare Recipients Increase the Chance of Welfare Exit? Evidence from Germany," IZA Discussion Papers 14268, Institute of Labor Economics (IZA).
    8. Hirsch, Boris & Müller, Steffen, 2014. "Firm leadership and the gender pay gap: do active owners discriminate more than hired managers?," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 47(1-2), pages 129-142.
    9. Schnitzlein, Daniel D. & Stephani, Jens, 2016. "Locus of Control and low-wage mobility," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 164-177.
    10. Günther Schmid, 2015. "Sharing Risks of Labour Market Transitions: Towards a System of Employment Insurance," British Journal of Industrial Relations, London School of Economics, vol. 53(1), pages 70-93, March.
    11. Dyah S. Pritadrajati & Anggita C. M. Kusuma & Sweta C. Saxena, 2020. "A Non-Healing Wound: Lasting Consequences Of Unemployment And Informal Self-Employment: An Empirical Evidence From Indonesia," Working Papers WP/09/2020, Bank Indonesia.
    12. Stephani, Jens, 2013. "Does it matter where you work? : employer characteristics and the wage growth of low-wage workers and higher-wage workers," IAB-Discussion Paper 201304, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Alexander Plum & Gundi Knies, 2019. "Local unemployment changes the springboard effect of low pay: Evidence from England," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-22, November.
    14. Plum, Alexander & Knies, Gundi, 2015. "Earnings prospects for low-paid workers higher than for the unemployed but only in high-pay areas with high unemployment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112845, Verein für Socialpolitik / German Economic Association.
    15. Hirsch, Boris & Mueller, Steffen, 2010. "Temporary agency work and the user firm's productivity: First evidence from German Panel Data," Discussion Papers 68, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    16. Plum Alexander, 2016. "Can Low-Wage Employment Help People Escape from the No-Pay – Low-Income Trap?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-28, October.
    17. Mosthaf, Alexander, 2011. "Low-wage jobs - stepping stones or just bad signals?," IAB-Discussion Paper 201111, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    18. Daniel D. Schnitzlein & Jens Stephani, 2011. "Lohnmobilität von jüngeren Geringverdienern in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(4), pages 13-30.
    19. Alexander Mosthaf, 2014. "Do Scarring Effects of Low-Wage Employment and Non-Employment Differ BETWEEN Levels of Qualification?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(2), pages 154-177, May.
    20. Wunder, Christoph & Riphahn, Regina, 2013. "Welfare transitions before and after reforms of the German welfare system," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79715, Verein für Socialpolitik / German Economic Association.
    21. Pritadrajati, Dyah S. & Kusuma, Anggita C.M. & Saxena, Sweta C., 2021. "Scarred for life: Lasting consequences of unemployment and informal self-employment," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 206-219.

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    More about this item

    Keywords

    state dependence; dynamic multinomial logit model; low-pay dynamics;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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