Low‐wage Jobs — Springboard to High‐paid Ones?

Abstract

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 bivariate 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 who experienced longer periods of unemployment. Low-paid work is less beneficial if the job is associated with a low social status.

Low-wage employment versus unemployment: Which one provides better prospects for women?

“…Uhlendorff (2006) for men or Knabe and Plum (2013) for men and women for Germany), we are the first to distinguish further between full-time and part-time employment by allowing that unobserved characteristics have different effects on the probabilities of working full-time and part-time. We find that the effects differ between the two working-time categories.…”

“…In addition, the effect of a low-wage job might also depend on its duration. Knabe and Plum (2013) use dynamic panel data models and show that taking up a low-paid job is most appropiate for longterm unemployed individuals. A further step to take the duration of (un-)employment episodes into account will be to use administrative data with daily information and to apply multivariate duration models.…”

“…Uhlendorff (2006) analyzes German SOEP-data and shows that for men low-wage jobs are stepping stones to high-paid jobs. Also using SOEP-data, Knabe and Plum (2013) analyze labor market transitions of women and men and find that taking up a low-paid job is especially appropriate for less-skilled persons and those with longer unemployment durations. The former result has also been found by Mosthaf (2014) with German administrative data for men working full-time.…”

Low-wage employment

“…However, low-paid workers are also more likely to move into higher pay in the future than those who are unemployed or those not in the labor force. For Germany, two studies show that the chances of obtaining a high-paid job by accepting low-paid work improve most strongly for those who have experienced longer periods of unemployment and for those who are less-skilled [13]. On the other hand, for individuals with medium or high qualification levels, the risk of non-employment in the future is not significantly lowered by taking up a low-paid job instead of remaining unemployed [2].…”

The Program and Treatment Effect of Summer Jobs on Girls’ Post-Schooling Incomes

“…The analysis is informal, but it suggests that the program and the work experience while in high school was particularly beneficial to the academically weaker girls who one would expect to fare worse on the labor market later in life. Knabe and Plum (2013) found less-skilled persons to benefit the most from low-paid work experience (cf also Hensvik and Nordström-Skans, 2013).…”