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Estimating low pay transition probabilities accounting for endogenous selection mechanisms

By Lorenzo Cappellari and Stephen P. Jenkins


We propose a model of transitions into and out of low paid employment that accounts for non-ignorable panel dropout, employment retention and base year low pay status (‘initial conditions’). The model is fitted to data for men from the British Household Panel Survey. Initial conditions and employment retention are found to be non-ignorable selection processes. Whether panel dropout is found to be ignorable depends on how item non-response on pay is treated. Notwithstanding these results, we also find that models incorporating a simpler approach to accounting for non-ignorable selections provide estimates of covariate effects that differ very little from the estimates from the general model

Topics: HD Industries. Land use. Labor
Publisher: Wiley on behalf of the Royal Statistical Society
Year: 2008
DOI identifier: 10.1111/j.1467-9876.2007.00607.x
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Provided by: LSE Research Online
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