Low-Wage Jobs – Springboard to High-Paid Ones?
Knabe AndreasPlum Alexander
CEIS Research Paper
We examine whether low-paid jobs have an effect on the probability that unemployed persons obtain better-paid jobs in the future (springboard effect). We make use of data from the German Socio-Economic Panel (SOEP) and apply a dynamic random-effects probit model. Our results suggest that low-wage jobs can act as springboards to better-paid work. The improvement of the chance to obtain a high-wage job by accepting low-paid work is particularly large for less-skilled persons and for individuals with longer periods of unemployment. Low-paid work is less beneficial if the job is associated with a low social status.
Keywords: dynamic random effects models, low pay dynamics, state dependence, unemployment dynamics
JEL codes: J64, J62, J31
Date: Thursday, July 26, 2012