Duration of low-wage employment: a study based on a survival model

Abstract

Purpose The purpose of this paper is to investigate low-wage retention using a survival analysis approach. Design/methodology/approach Variables explaining low-wage retention take into account the characteristics of the employee, such as education, age, tenure with the company, gender and nationality, and the characteristics of the job and the company such as industry affiliation, number of employees, age of the company and location. Findings Female workers and workers with low level of education, older ones, those with more seniority in the company and those of Asian origin remain longer in a low-wage situation. Also, workers in smaller and older companies located outside the Lisbon region are more likely to stay in a low-wage situation. Practical implications The policy implications are clear. Education plays a prominent role: the higher the level of education of the individual, the higher the probability of him/her leaving low pay. Training programs may help employees in Portugal to leave the low-wage situation. Furthermore, policies must address the different mobility rates of different nationalities and different activities. Training programs are more urgent for hotels and restaurants and transports and communication. The findings also indicate that those initially working in younger firms and larger firms have a higher probability of leaving the low-wage situation. This is a stimulus for decision makers to stimulate employment in the younger firms or in the larger firms. Originality/value Despite low-wage retention being a well-known field of research, to our knowledge this is the first research paper using survival analysis to explain the duration of a low-wage situation.