December 2009

IZA DP No. 4611: Low-Wage Employment versus Unemployment: Which One Provides Better Prospects for Women?

Alexander Mosthaf, Thorsten Schank, Claus Schnabel

published in: IZA Journal of European Labor Studies, 2014, 3:21

This study analyzes state dependence in low-wage employment of western German women using GSOEP data, 2000-2006. We estimate dynamic multinomial logit models with random effects and find that having a low-wage job increases the probability of being low-paid and decreases the chances of being high-paid in the future, in particular for low-paid women working part-time. However, concerning future wage prospects low-paid women are clearly better off than unemployed or inactive women. We argue that for women low-wage jobs can serve as stepping stones out of unemployment and are to be preferred to staying unemployed and waiting for a better job.