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The interrelated dynamics of unemployment and low‐wage employment
Author(s) -
Stewart Mark B.
Publication year - 2007
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.922
Subject(s) - unemployment , economics , wage , labour economics , low wage , insignificance , demographic economics , macroeconomics , psychology , psychotherapist
This paper examines the extent of state dependence in unemployment and the role played in this by intervening low‐wage employment. A range of dynamic random and fixed‐effects estimators are compared. Low‐wage employment is found to have almost as large an adverse effect as unemployment on future prospects and the difference in their effects is found to be insignificant. Evidence is presented that low‐wage jobs act as the main conduit for repeat unemployment and considerably increases its probability. Obtaining a higher‐wage job reduces the increased risk of repeat unemployment to insignificance. Copyright © 2007 John Wiley & Sons, Ltd.