UNSPECIFIED (1999) Low pay dynamics and transition probabilities. ECONOMICA, 66 (261). pp. 23-42. ISSN 0013-0427

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Abstract

This paper models low pay transitions in Britain using a bivariate probit model with endogenous selection to address the 'initial conditions' problem and parental variables as instruments. The exogeneity of the initial state is strongly rejected and results in considerable overstatement of the effects of explanatory factors. The probability of being low paid depends strongly on low pay in the previous year. Restricting attention to those who remain employees results in an overstatement of the probability of the low paid moving up the earnings distribution, but is not found to have much effect on the estimated effects of explanatory variables.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	ECONOMICA
Publisher:	BLACKWELL PUBL LTD
ISSN:	0013-0427
Date:	February 1999
Volume:	66
Number:	261
Number of Pages:	20
Page Range:	pp. 23-42
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/14874

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