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Low Wage Jobs and Pathways to Better Outcomes - WP 02/29

Publication Details

  • Low Wage Jobs and Pathways to Better Outcomes
  • Published: Dec 2002
  • Status: Current
  • Authors: Miller-Lewis, Lauren; Richardson, Sue
  • JEL Classification: J30; J60
  • Hard copy: Available in HTML and PDF formats only.

Low Wage Jobs and Pathways to Better Outcomes

New Zealand Treasury Working Paper 02/29

Published: December 2002

Authors: Sue Richardson and Lauren Miller-Lewis


Many people find their first employment in a low wage job. Others accept low wage jobs after a period out of the workforce or unemployed. An issue of vital social interest is the speed with which low wage workers move on to better jobs. This review of the international literature finds that the extent of mobility depends on the definition of low wage, and that the least upwardly mobile are older, less educated workers, including middle aged women, sole mothers and men who have been retrenched. Young, educated, urban workers quickly move to better paid jobs. Everywhere, women are more likely to be low paid than men, and have lower mobility. Higher education reduces the risk of low pay, but not to zero.

The paper goes on to examine the extent and sources of wage mobility, and looks carefully at the question of whether a low wage job can be assumed to be preferable to no job (and finds that it cannot). It finds that countries with high levels of wage inequality have lower levels of wage mobility. It concludes with a discussion of possible policy steps that could reduce the risk of people being stuck in low wage jobs for long periods. These should be targeted at both the demand side (the structure of jobs) and the supply side (the capacity of workers).

Table of Contents

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Table of Contents

List of Tables

List of Figures

1 Introduction

2 The context of low wage work

3 What are low wages?

4 Who are the low wage workers?

5 What are the low wage jobs?

6 Why pay low wages?

7 Why accept low wages?

8 How much mobility is there?

9 Sole mothers

10 Sources of upward wage mobility

11 Is a low wage job better than no job?

12 Does the supply of skills create its own demand?

13 Conclusions

14 Policies for wage mobility


twp02-29.pdf (525 KB) pp. 91

List of Tables

List of Figures


We have been greatly assisted by the skilled NILS staff in the preparation of this monograph. In particular, we wish to thank Ben Safari for his excellent research assistance. Sid Durbin and his colleagues in the New Zealand Treasury have provided most helpful opinions and challenging questions. We have also been greatly assisted by the insightful comments of two referees, Jeff Borland and Julia Lane. We remain solely responsible for any shortcomings.


The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury.  The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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