Economics Bulletin: "Reconsidering the interrelated dynamics of unemployment and low-wage employment in Great Britain"

23.06.2016 -  

Neues Diskussionspapier von Alexander Plum:

Stewart (2007, JAE) finds that being employed at low wages (compared to higher wages) increases the risk of future unemployment. The risk of unemployment does not differ significantly between current low-wage employment and current unemployment. The author concludes that 'in terms of future employment prospects, low wages are closer to unemployment than to higher-paid jobs' (p. 529). Alexander Plum shows in this paper that the result depends strongly on the thershold used to distinguish between high and low wages: applying this widely used OECD (1997) definition of low-wages substantially changes the findings of Steward (2007). With this threshold, Plum finds that low wages are helpful for significantly reducing the risk of future unemployment compared to unemployment. Moreover, the categorization of the unemployed, the included variables with reference to the educational background, the age and the age restrictions imposed on the sample and switching from gross hourly wages in nominal terms to real terms have an impact on the findings


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Economics Bulletin

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