Low-wage jobs: a means for employment integration of the unemployed? : evidence from administrative data in Germany and Austria

"Does the low wage sector serve as a stepping stone towards integration into better-paid jobs or at least towards integration of jobless people into employment? There is evidence for a 'low-wage trap' and for a high risk of low-wage earners to get unemployed, but this may also be due to sorting effects and not to low-wage work itself. The present paper contributes to this debate analysing employment spells of male low-wage earners who had been unemployed before, with methods of continuous-time event history analysis. The present data have been retrieved from two large administrative micro-data sources: the IAB employment sample (IABS) for Germany, and a combination of social security data from the Austrian Social Insurance Institutions. Two possible exits of low-wage spells are focused on: exits to higher-paid employment (upward mobility vs. persistence), and exits to unemployment ('no pay-low pay cycle'). The results show shorter spell durations in Austria, pointing to a considerably higher fluctuation and labour turnover in the Austrian labour market. The influence of individual and firm-related characteristics and of the individual unemployment history on exit probabilities and the role of duration dependence in both countries is investigated. With regard to upward mobility, no convincing evidence for 'true' duration dependence is found, at least for Germany. As to the risk of falling back into unemployment, the results suggest that even low-wage workers can accumulate job-related human capital favouring employment integration over time." (Author's abstract, IAB-Doku) ((en))Geringverdiener, Niedriglohn, erwerbstätige Männer, arbeitslose Männer, berufliche Integration, Berufsverlauf - internationaler Vergleich, Arbeitslosigkeit, beruflicher Aufstieg, labour turnover, Arbeitslosigkeitsdauer, Beschäftigungsdauer, Österreich, Bundesrepublik Deutschland

Entwicklung der Erwerbsbeteiligung bis 2030 unter Berücksichtigung von Änderungen im Bildungsverhalten und rezenten Pensionsreformen

The Austrian population will continue to grow over the next decades. At the same time the number of working age people is predicted to decline until 2030. In how far this demographic change will translate into changes in the total number of people in the labour force (employed plus unemployed people) depends mainly on their labour market attachment. This paper analyses the development of labour force participation rates explicitly accounting for changes in the education structure, long-term trends in participation rates and recent tightenings in pension law. These factors are shown to affect labour force participation rates markedly. A reduction in the total number of people in the workforce until 2030 seems unlikely when accounting for these facts

Do Wage Subsidies Work in Boosting Economic Inclusion? Evidence on Effect Heterogeneity in Austria

We construct two matching scenarios to estimate the long-term impact of targeted wage subsidies in Austria on the subsequent labour market integration of previously unemployed participants. Even if substantial dead-weight loss is taken into account, the treated experience a significant increase in employment in the seven years from program start and spend considerably less time in unemployment and out of the labour force than similar nonparticipants. The effect increases with age and with pre-treatment unemployment duration. It is particularly large for older workers and the long-term unemployed. Hence, wage subsidies are particularly effective in helping disadvantaged unemployed individuals back into employment. Cumulated earnings rise significantly for the treated as a result of their relative increase in employment. Participation in the program does, however, not exert a positive influence on the quality of jobs in terms of the average wage level

The gender pay gap in Austria: Tamensi movetur!

Policies to reduce the gender pay gap feature prominently on the political agenda and interventions in the labor market are frequently proposed, claiming a persistent wage gap. We examine the change of the gender wage gap in Austria between 2002 and 2007 with new data from administrative records and find that it declined from 24% in 2002 to 19% in 2007. We observe that women's improved educational attainments were partly ofiset by a shift in the demand for skilled workers that disadvantaged unskilled labor. The main determinant of this decline is however the improvement of women's relative position in unobserved characteristics.gender wage differentials, wage inequality, decomposition, matched employer-employee data

Job Search Behaviour and Job Search Success of the Unemployed

We combine information from a job-seeker survey and two sources of administrative data to shed light on the job search behaviour and job search success of the unemployed. Our particular focus is on the way the Public Employment Service (AMS) shapes job search effort and outcomes in terms of the exit rate to work and of post-unemployment job match quality. Job-seekers attach a high value to internet job search, but social networks are by far the most promising job search channel. The AMS has a central role in the job search process of the unemployed, particularly for job-seekers with low education and long unemployment record. We find a positive link between the amount of AMS counselling and job search effort. Our results indicate that the AMS is effective in facilitating exit from unemployment to paid work - directly, through placing of jobs and increasing the efficiency of job search, as well as indirectly, by stimulating job search effort. The jobs placed by this intermediary do not significantly differ in job tenure from those generated by other channels, but they are rather poorly paid. After adjustment for differences in covariates, monthly starting wages are significantly lower for people placed via the AMS compared with those successful with the internet and private employment agencies

Why Labour Market Response Differed in the Great Recession: The Impact of Institutions and Policy

This paper investigates the performance of labour markets during the recent crisis for 28 industrialised countries, specifically the reaction of employment and unemployment indicators relative to output changes. We construct a composite indicator for output as well as labour market performance. The determinants of cross-country differences we chose are regulation, flexicurity elements and contracts. We find a robust positive impact of labour market regulation, while the impacts of flexicurity strategies and contracts are difficult to pin down econometrically. Finally we venture a tentative look at the ongoing recovery

Choice and success of job search methods

Job seekers can influence the arrival rate of job offers by the choice of search effort and the search methods they use. In this paper we empirically investigate the contribution of the use of different search methods on the outcome of search. We use unique data on the search behavior of job seekers sampled from the inflow into employment during the year 1997 in Austria, which matches survey information with administrative records. We analyze the quality of job matches in terms of wages and job durations for employed and unemployed workers. Our main finding is that the public employment service specializes in the support of low quality workers. For these workers it is equal in efficiency to the other search channels

Low-wage Jobs: A Means for Employment Integration of the Unemployed? Evidence from Administrative Data in Germany and Austria

Does the low wage sector serve as a stepping stone towards integration into better-paid jobs or at least towards integration of jobless people into employment? There is evidence for a "low-wage trap" and for a high risk of low-wage earners to get unemployed, but this may also be due to sorting effects and not to low-wage work itself. The present paper contributes to this debate analysing employment spells of male low-wage earners who had been unemployed before, with methods of continuous-time event history analysis. The present data have been retrieved from two large administrative micro-data sources: the IAB employment sample (IABS) for Germany, and a combination of social security data from the Austrian Social Insurance Institutions. Two possible exits of low-wage spells are focused on: exits to higher-paid employment (upward mobility vs. persistence), and exits to unemployment ("no pay-low pay cycle"). The results show shorter spell durations in Austria, pointing to a considerably higher fluctuation and labour turnover in the Austrian labour market. The influence of individual and firm-related characteristics and of the individual unemployment history on exit probabilities and the role of duration dependence in both countries is investigated. With regard to upward mobility, no convincing evidence for "true" duration dependence is found, at least for Germany. As to the risk of falling back into unemployment, the results suggest that even low-wage workers can accumulate job-related human capital favouring employment integration over time

The distribution of the gender pay gap in Austria: Evidence from matched employer-employee data and tax-records

We examine the gender wage gap in Austria using new matched employer-employee data from 2007. We investigate the gap at the conditional wage distribution of men and women, and decompose it into the parts which are attributed to different characteristics and different returns to these characteristics. We find that women earn on average about 14% less than men for given characteristics, and that about 50% of the gender wage gap cannot be attributed to observable characteristics. The extent of different returns for women and men increase over the wage distribution where wage bargaining is predominantly on an individual basis (in contrast to low wage jobs, where collective bargaining contracts are binding)

The distribution of the gender wage gap in Austria: evidence from matched employer-employee data and tax records

We examine the gender wage gap in Austria using new matched employer-employee data from 2007. We estimate quantile regressions and investigate the gender wage gap at the conditional wage distribution of men and women. We decompose the gender wage gap into the parts which are due to different characteristics and different returns to these characteristics. About 60 % of the gender wage gap cannot be explained by differences in human capital or other observable indicators of productivity. Taking differences in the characteristics into account, we find that women earn on average about 11 % less than men. We further estimate that differences in the returns for women and men increase over the wage distribution