Persistence of Low Pay Employment

Several studies have shown that working in the low wage sector significantly increases the risk of staying low paid employed in the future. However, the past literature has only considered changes in labour market status at the annual level and has not accounted for within-year changes of an individual’s labour market position.

Using a large administrative data-set with monthly earnings information, this study shows that state dependence in low pay employment is highly heterogeneous: workers with a strong attachment to the low pay sector have a significantly higher probability of staying low-paid employed compared to their low paid colleagues with a weak low pay attachment. Moreover, evidence is presented that the conventional identification strategy using annual data both under- and overestimates the persistence in low pay substantially.

Authors: Alexander Plum and Gail Pacheco

Copy of presentation

16 March 2018
2 - 3pm
WF214, Business School Building
Level 2, 42 Wakefield Street
AUT City Campus

See poster here

Hosted by the New Zealand Work Research Institute and the Economics Department.