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The Dynamics of Low Pay Employment in Australia

Publication Date
  • J2 - Demand And Supply Of Labor
  • J3 - Wages
  • Compensation
  • And Labor Costs
  • J33 - Compensation Packages
  • Payment Methods
  • Economics


Using the Household, Income and Labour Dynamics in Australia (HILDA) survey, this study shows that the largest proportion of low pay spells originated from higher pay; only a small proportion were from non-employment or recent graduates. While the majority of low pay spells transitioned to higher pay, a significant proportion ended up with non-employment. The multivariate analysis shows that workers who entered low pay from higher pay also have a higher hazard rate of transitioning to higher pay; and those who entered low pay from non-employment are more likely to return to non-employment. Union members, public sector jobs and working in medium to large size firms increase the hazard rate of transitioning to higher pay, while immigrants from non-English speaking countries and workers with health problems have a lower hazard rate of moving into higher pay. There is some evidence that the longer a worker is in low paid employment, the less likely they are to transition to higher pay.

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