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.
Highlights
In many European countries, low-wage employment has become a more and more important characteristic of the labor market and a controversial topic for debate, in particular since a disproportionate share of low-wage earners are women (European Commission 2004)
We estimate a dynamic multinomial logit model with random effects and find that having a low-wage job – compared to having a high-wage job – ceteris paribus decreases the probability of being high-paid in the future
5 Conclusions This study analyzes true state dependence in low-wage employment of western German women and investigates whether it is better to take up a low-wage job or remain unemployed and wait for a better job offer
Summary
In many European countries, low-wage employment has become a more and more important characteristic of the labor market and a controversial topic for debate, in particular since a disproportionate share of low-wage earners are women (European Commission 2004). Using German SOEP data, 1999 – 2009, this study analyzes state dependence in low-wage employment of western German women, where we distinguish between full-time and part-time working.
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