State dependence and wage dynamics: A heterogeneous Markov chain model for wage mobility in Austria

Arbeitspapier

The behaviour of individual movements in the wage distribution over time can be described by a Markov process. To investigate wage mobility in terms of transitions between quintiles in the wage distribution we apply a fixed effects panel estimation method suggested by Honorè and Kyriazidou (2000). This method of mobility measurement is robust to data contamination like all methods that treat fractiles. Moreover it allows for the inclusion of exogenous variables that change over time. We apply the estimator to a set of individual data form the Austrian social security records and find that disregarding unobserved heterogeneity greatly underestimates wage mobility. Simulated earnings profiles show that women are less mobile than men and have a tendency to be stuck in the lower part of the wage distribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Reihe Ökonomie / Economics Series ; No. 114

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Wage Level and Structure; Wage Differentials ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General
• Subject: wage mobility ; Markov process ; fixed effects panel estimation ; Lohnstruktur ; Soziale Mobilität ; Markovscher Prozess ; Schätzung ; Österreich

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Weber, Andrea
• Event: Veröffentlichung
• (who): Institute for Advanced Studies (IHS)
• (where): Vienna
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/71210
• Last update: 10.03.2025, 11:41 AM CET