D. Pavlopoulos

Who Benefits from a Job Change: The Dwarfs or the Giants?

ABSTRACT In this paper, we use panel data from the UK and Germany to investigate the effect of employer changes and in-firm job changes on year-to-year wage mobility of male full-time workers. Following segmentation theories and the job search theory, we study whether this effect differs for the low- and high-wage workers. As wage growth is endogenous to the decision of changing jobs, a two-stage Heckman selection approach is used. Specifically, we first estimate a random-effects multinomial logit model for the selection into a job transition and then a fixed-effects panel regression model for the wage growth. The findings suggest that both external and in-firm job changes result into substantial wage gains for the low-paid workers but not for the medium- or high-paid workers. However, the wage gain of low-paid workers due to an in-firm job change is only observed in the UK and is less pronounced than their gain by an external job change. In the German labour market, the later effect is insignificant. The results indicate that low-paid workers profit more from a voluntary change of employer in the coordinated German labour market and from a voluntary in-firm change in the liberal British labour market.

Starting your career with a fixed-term job: Stepping-stone or “dead end”?

This paper uses panel data from the UK and Germany to investigate the difference in the learning effect between workers who enter the labour market with a fixed term and a permanent job. Our results verify the existence of a wage penalty for entering the labour market with a fixed-term contract for the British males (7.1%) and especially for the British females (21.2%). British females also have a very strong learning effect that is especially large for temporary starters. In Germany, the initial wage penalty for temporary starters is smaller than in the UK—4.5% for the males and 3% for the females—and is persistent only for the males. Although initial wage differences are mitigated through the accumulation of skills on the job, this process differs between temporary and permanent starters. This suggests that the type of the starting contract may be a feature of labour market segmentation.

Starting Your Career with a Temporary Job: Stepping-Stone or 'Dead End?'

This paper uses panel data from the UK (BHPS) and Germany (GSOEP) to investigate the wage effect of entering the labour market with a temporary job. Further than the previous literature that studied the effect of the contract type on wage dynamics in the explained part of a wage regression, we also investigate the effect of the starting contract on the variance of unobserved individual effects and random earnings shocks. For this purpose, we decompose earnings into a component determined by initial unobserved earnings ability and experience-related heterogeneity and a component determined by earnings shocks. Our results for Germany, verify the existence of a wage penalty for entering the labour market with a temporary contract. This penalty disappears after 12.5 years for male workers and after 6.5 years for the female workers. In the UK, a similar wage penalty is found for male workers that persists over their working career. In contrast, no wage penalty is found for the British female workers. In the UK, the initial unobserved earnings capacity is higher for workers starting off with a permanent job, while no such difference emerges in Germany. However, this initial unexplained wage inequality decreases faster for workers starting their career with a temporary contract than their colleagues that entered the labour market with a permanent job. Finally, the persistence of earnings shocks is higher for workers entering the labour market with a temporary contract.

Reconciliation of inconsistent data sources by correction for measurement error : The feasibility of parameter re-use

National Statistical Institutes (NSIs) often obtain information about a single variable from separate data sources. Administrative registers and surveys, in particular, often provide overlapping information on a range of phenomena of interest to official statistics. However, even though the two sources overlap, they both contain measurement error that prevents identical units from yielding identical values. Reconciling such separate data sources and providing accurate statistics, which is an important challenge for NSIs, is typically achieved through macro-integration. In this study we investigate the feasibility of an alternative method based on the application of previously obtained results from a recently introduced extension of the Hidden Markov Model (HMM) to newer data. The method allows a reconciliation of separate error-prone data sources without having to repeat the full HMM analysis, provided the estimated measurement error processes are stable over time. As we find that these processes are indeed stable over time, the proposed method can be used effectively for macro-integration, to reconciliate both first-order statistics-e.g. the size of temporary employment in the Netherlands-and second-order statistics-e.g. the amount of mobility from temporary to permanent employment.

Institutions and structures as barriers? A comparison of native-born and immigrant unemployment durations across 12 European countries

This study investigated the effect of institutions on the unemployment duration gap between non-EU immigrants and native-born in 12 European countries. Going further than the existing literature, our study encompassed unemployment duration, distinguishing between exits to inactivity, primary and secondary employment. Additionally, we have provided a stronger micro-foundation to the comparative literature by introducing institutional measures for unemployment-related benefits at the individual level rather than merely using aggregate proxies. Our analysis found no disincentive effects of benefits for immigrants. Furthermore, the employment prospects of immigrants were better when the demand for low-skilled labour was high, and immigration policy was labour market-oriented. In contrast, employment protection legislation did not affect the unemployment duration of immigrants.

Income Inequality in the EU: How Do Member States Contribute?

Purpose - – The purpose of this paper is to analyse the structure of overall inequality in the EU-15 by investigating the extent to which total inequality is attributed to inequality between or within the individual countries. Also, the paper examines whether the contribution of between-country and within-country components changed in the period between 1996 to 2008, before the outbreak of the economic crisis. Design/methodology/approach - – The paper applies a decomposition analysis by population subgroup utilizing micro-data from the ECHP and EU-SILC surveys. A number of inequality indices are employed to capture the different aspects of inequality and test the robustness of the results. Findings - – The analysis shows that the between-countries differences account only for a small part of overall inequality in the EU-15. Furthermore, the contribution of the between county component to total inequality has shrunk dramatically during the examined period. The overall EU inequality has been affected disproportionally by income disparities at the various parts of the income distribution in different countries. Practical implications - – Policies aiming to reduce inequality within each country would be far more effective in reducing overall inequality in the EU than policies targeting to reduce only disparities between member states. Originality/value - – The findings question the effectiveness of EU policy priorities to decrease inequality that have mainly focused on reducing cross-country and/or regions differences regarding certain macroeconomic indicators such as per-capita income (or GDP). The evidence suggests that the social protection system provides a useful tool in explaining the differences in inequality between countries and their contribution to overall EU inequality.