Cappellari, Lorenzo (1999) Low-wage mobility in the Italian labour market. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

This paper uses SHIW panel data for 1993 and 1995 to model individual transition probabilities at the bottom of the Italian wage distribution. The analysis is based on a bivariate probit model with endogenous switching which allows tackling the initial conditions problem, i.e. the potential endogeneity of the conditioning starting state. Results show the appropriateness of such a choice: the correlation between state and transition probabilities is significantly different from zero, while overlooking endogeneity leads to overstatement of both size and significance of coefficients in the transition equation. The paper shows that while some factors such as education, sex and geographical location have an effect on low-pay persistence, job related variables are more effective in avoiding falls into low-pay from higher pay. It is also shown how raw persistence involves a considerable share of true state dependence, pointing towards the existence of low-pay stigma.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	D History General and Old World > DG Italy H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Labor mobility -- Italy, Poor -- Italy, Initial value problems, Differential equations, Italy -- Economic conditions, Italy -- Social conditions
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	May 1999
Number:	No.531
Number of Pages:	32
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	First draft, November 1998; this version, May 1999
Funder:	Economic and Social Research Council (Great Britain) (ESRC), Università cattolica del Sacro Cuore (UCSC)
Grant number:	R00429724408 (ESRC)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1648

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