TY - UNPB
T1 - Escaping low pay: do male labour market entrants stand a chance?
AU - Fouarge, Didier
AU - Pavlopoulos, Dimitris
PY - 2008
Y1 - 2008
N2 - Purpose { This paper investigates the extent and the human-capital de- terminants of low-wage mobility for labour market entrants, in the UK and Germany. Design/methodology/approach { Using panel data for the UK (BHPS) and Germany (GSOEP), we apply a competing-risks duration model that al- lows us to study transitions from low pay to competing destination states: higher pay, self-employment, unemployment and inactivity. Unobserved het- erogeneity is tackled by a non-parametric mass-point approach. Findings { We ¯nd that low pay is only a temporary state for most young job starters. However, there is a small group of job starters that is caught in a trap of low pay, unemployment or inactivity. In the UK, job starters escape from low pay mainly by developing ¯rm-speci¯c skills. In Germany, involvement in formal vocational training and the attainment of apprenticeship quali¯cations account for low pay exits. Originality/value { Over the past decades, unemployment and low-wage employment have emerged as major challenges facing young labour market entrants. While most empirical studies focus exclusively on the transition from low pay to high pay, we show that a signi¯cant percentage of young entrants are caught in a low-pay - non-employment trap. Moreover, we show that, depending on the institutional context, di®erent types of human capital investments can account for a successful low-pay exit.
AB - Purpose { This paper investigates the extent and the human-capital de- terminants of low-wage mobility for labour market entrants, in the UK and Germany. Design/methodology/approach { Using panel data for the UK (BHPS) and Germany (GSOEP), we apply a competing-risks duration model that al- lows us to study transitions from low pay to competing destination states: higher pay, self-employment, unemployment and inactivity. Unobserved het- erogeneity is tackled by a non-parametric mass-point approach. Findings { We ¯nd that low pay is only a temporary state for most young job starters. However, there is a small group of job starters that is caught in a trap of low pay, unemployment or inactivity. In the UK, job starters escape from low pay mainly by developing ¯rm-speci¯c skills. In Germany, involvement in formal vocational training and the attainment of apprenticeship quali¯cations account for low pay exits. Originality/value { Over the past decades, unemployment and low-wage employment have emerged as major challenges facing young labour market entrants. While most empirical studies focus exclusively on the transition from low pay to high pay, we show that a signi¯cant percentage of young entrants are caught in a low-pay - non-employment trap. Moreover, we show that, depending on the institutional context, di®erent types of human capital investments can account for a successful low-pay exit.
KW - duration model
KW - human capital
KW - labour market entry
KW - low pay
M3 - Working paper
T3 - IRISS Working Papers
BT - Escaping low pay: do male labour market entrants stand a chance?
PB - CEPS/INSTEAD
ER -