In this project, we study how earnings mobility in the low-wage sector has changed over the last two decades in Germany. The objective is to quantify the extent to which a potential decline in the probability of escaping low earnings is caused by an increase in the persistence of low-wage employment. To address the initial conditions problem and the endogeneity of earnings attrition, we model low-pay transitions using a multivariate Probit model that accounts for selection into low-wage employment and sample retention. The data we use to estimate the model stem from the IAB-Employment Sample 1975-2004, which is a 2-% sample of all employees subject to the German Social Security System.
Deutsche Forschungsgemeinschaft, Bonn, DE
01.06.2011 - 31.05.2013