Labour Market Entry Conditions, Wages and Job Mobility

39 Pages Posted: 9 Jul 2010

See all articles by Ronald Bachmann

Ronald Bachmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

Peggy Bechara

RWI Essen

Date Written: May 1, 2010

Abstract

Economic conditions at the time of labour market entry can induce wage differentials between workers entering the labour market at different points in time. While the existence and persistence of these entry wage differentials are well documented, little is known about their interaction with employees’ mobility behaviour. This paper contributes to this research area by analyzing the interaction between job mobility and entry wage differentials using German administrative data. The results suggest that labour market entrants earning less than the average starting wage are more likely to change jobs, directly from employer to employer as well as indirectly via an unemployment spell. In addition they are more likely to change occupation. Moreover, job mobility tends to reduce the effects of labour market entry conditions, implying that job mobility operates as an adjustment mechanism that mitigates entry wage differentials. These results hold not only for high-skilled, but also for medium-skilled and unskilled workers.

Keywords: Mobility, job-to-job, wages, labour market entry, initial conditions

JEL Classification: E24, J31, J62, J64

Suggested Citation

Bachmann, Ronald and Bauer, Thomas K. and Bechara, Peggy, Labour Market Entry Conditions, Wages and Job Mobility (May 1, 2010). Available at SSRN: https://ssrn.com/abstract=1635698 or http://dx.doi.org/10.2139/ssrn.1635698

Ronald Bachmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+49 201 8149 264 (Phone)
+49 201 8149 284 (Fax)

HOME PAGE: http://www.rwi-essen.de

University of Bochum - Faculty of Economics ( email )

Universitätsstraße 150
Gebäude GC, Ebene 3, Raum 58
D-44780 Bochum
Germany
+02 34 32 28341 (Phone)
+02 34 32 14273 (Fax)

HOME PAGE: http://www.ruhr-uni-bochum.de/empwifo/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 38 94 529 (Phone)
+49 228 38 94 510 (Fax)

Peggy Bechara (Contact Author)

RWI Essen ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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