Abstract
Summary Using representative linked employer-employee data of the German Federal Employment Agency, this paper analyzes to which extent full-time employees who earned low wages (less than two-thirds of the median wage) in 1998/99 were able to earn higher wages in the following years, and which factors play a role in this context. It is shown that just one out of seven of these low-wage earners was able to earn wages above the low wage threshold in 2005. Bivariate probit estimations with endogenous selection indicate that younger and better qualified low-wage earners record a higher probability of getting higher wages, whereas women are less successful. In addition, this probability shows a significant relationship with the size and the employment structure of the establishment. Moving from one establishment to another is an important instrument for leaving low-wage employment.
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