Low-pay highe pay and job sa is ac ion wi hin he Eu opean Union
empi ical e idence om ou een coun ies
Luis Diaz-Se ano♣
Na ional Uni e si y o I eland Maynoo h,
IZA and CREB
Jose A. Cab al Viei a♦
Uni e si y o he Azo es
CEEAplA
Abs ac : We examine di e ences in job sa is ac ion be ween low- and highe -paid
wo ke s wi hin he Eu opean Union (EU). To do so The Eu opean Communi y
Household Panel Da a co e ing he pe iod 1994-2001 is used. Then we es o
di e ences in epo ed job sa is ac ion be ween low- and highe -paid wo ke s. We also
explain he exis ence o di e ences in he de e minan s o job sa is ac ion be ween hese
wo ypes o wo ke s and ac oss coun ies. Ou esul s indica e ha low paid wo ke s
epo a lowe le el o job sa is ac ion when compa ed wi h hei highe paid
coun e pa s in mos coun ies, excep in he UK. This suppo s he idea ha low-wage
employmen in hese coun ies mainly comp ises low quali y. The esul s also indica e
ha gap in a e age job sa is ac ion be ween low- and highe -paid wo ke s is ma kedly
wide in he Sou he n Eu opean coun ies han in he es o EU. Finally, he e a e
signi ican di e ences in he de e minan s o job sa is ac ion ac oss coun ies. I seems
hen ha a homogeneous policy may be inapp op ia e o inc ease sa is ac ion, and hence
labou p oduc i i y, in he EU as a whole. Hence, an imp o emen o he quali y o he
jobs in he EU may equi e di e en policies. In pa icula , in some coun ies such as
he Uni ed Kingdom emo ing low employmen , namely h ough egula ion, may
wo sen he wo ke s’ well-being, al hough in o he cases such a policy may lead o a
o ally di e en ou come.
Running i le: low-pay highe pay and job sa is ac ion
Key wo ds: Job sa is ac ion, job quali y, low-wage employmen
JEL-Code: J28
♣ Depa men o Economics (Rhe o ic House), Na ional Uni e si y o I eland Maynoo h, Co. Kilda e,
I eland. E-mail: [email p o ec ed].
♦ Depa men o Economics and Managemen . Uni e si y o he Azo es, Rua Mãe de Deus, 9500 Pon a
Delgada – Po ugal. E-mail: jose iei a@no es.uac.p
1
In oduc ion
Job sa is ac ion has become a ma e o g ea in e es in social sciences. I has
been a gued in he li e a u e ha answe s o ques ions abou how people eel owa d
hei job a e no meaningless bu a he con ey use ul in o ma ion on indi idual
beha io such as job qui s (Hame mesh, 1977, F eeman, 1978, McE oy and
Cascio,1985, Ake lo e al.,1988 and Shields and P ice, 2002), absen eeism and
p oduc i i y (V oom, 1964, Mangione and Quinn, 1975, and Clegg, 1983). Mo eo e ,
job sa is ac ion is conside ed a s ong p edic o o o e all indi idual well-being
(A gyle, 1989 and Judge and Wa anabe, 1993). As a consequence, se e al s udies ha e
a emp ed o iden i y he de e minan s o job sa is ac ion (see, Bo jas, 1979, Mille ,
1990, Meng, 1990, Idson, 1990, Cla k, 1996 and 1997, Cla k and Oswald, 1996 and
Souza-Poza and Sousa-Poza, 2000).
In addi ion, he incidence and he pe sis ence o low-pay employmen has
become a opic o conce n in many de eloped economies as a esul o inc easing wage
inequali y (see OECD, 1996 and 1997, Asplund e al., 1998, Luci o a and Sal e da,
1998, S ewa and Swa ield, 1999, Cappella i, 2000, Ca doso e al., 2000). Mo eo e ,
low pay employmen and job quali y ha e become impo an policy issues, namely in
he Eu opean Union (see Eu opean Commission, 2001 and 2002). Also Sal e da e al.
(2001) pu o wa d he idea ha policies owa ds low-wage jobs should cen e on hei
quali y a leas as impo an ly as on he le el o pay which hey p o ide.
Job quali y is a ela i e concep ega ding objec i e cha ac e is ics o he job-
wo ke ma ch. I also in ol es he subjec i e e alua ion o hese cha ac e is ics by he
espec i e wo ke , on he basis o his cha ac e is ics and expec a ions. The Eu opean
Union Employmen in Eu ope (2001) epo sugges s ha in he absence o a single
2
composi e indica o any analysis o job quali y mus be based on da a on bo h objec i e
and subjec i e e alua ions o he wo ke -job ma ch. In addi ion, he Eu opean Union
Employmen (2002) epo ein o ces his s ance wi h he sugges ion o he inclusion o
job sa is ac ion in i s de ini ion o job quali y.
Indeed, Leon a idi and Sloane (2001) use job sa is ac ion as a p oxy o job
quali y in he B i ish labo ma ke . Fu he mo e, hey a emp o dis inguish be ween
wo s ands o he li e a u e: he segmen ed labo ma ke heo y e sus compensa ing
wage di e en ials heo ies. The segmen ed labo ma ke iew, o , a leas , he dual labo
ma ke e sion, claims he exis ence o wo dis inc labo ma ke s wi h s ong mobili y
ba ie s be ween hem. In addi ion, his heo y a gues ha we can classi y jobs in o
good jobs and bad jobs, wi h bad jobs being hose no only ha ing wo se wo king
condi ions, bu also lowe wages. As Leon a idi and Sloane (2001) a gue, his con as s
wi h he compensa ing wage di e en ials heo y acco ding o which jobs wi h poo
wo king condi ions would be expec ed, ce e is pa ibus, o compensa e o his wi h
highe pay.
Leon a idi and Sloane (2001) su p isingly conclude ha low pay wo ke s epo
a highe job sa is ac ion han hei highe pay coun e pa s. In hei opinion, his cas s
doub on he iew ha low paid jobs a e bad jobs and ha high paid jobs a e good jobs.
This is ein o ced by hei inding ha i is by no means he case ha mo ing om a
low paid o a highe paid job inc eases job sa is ac ion. In sum, he esul s do no
suppo he iew ha low paid jobs a e inhe en ly o low quali y, a leas as a as
B i ish e idence is conce ned. This seems in line wi h a iew ha low paid wo ke s
likely ob ain compensa ing di e ences in he o m o non-pecunia y bene i s. Jones and
Sloane (2003) and Leon a idi e al. (2004) also p esen his ype o conclusion.
3
Appa en ly, he e is a ma ching p ocess in he labo ma ke as a whole in which
indi iduals seeking highe pay a e alloca ed o highe -paying jobs and hose seeking o
non-pecunia y bene i s a e alloca ed o low-paying jobs. In such a case, emo ing low
paid jobs, namely h ough egula ion, would no necessa ily imp o e wo ke ’s well
being.
Howe e , he e is no eason o belie e ha such a ype o indings hold o he
o he Eu opean labou ma ke s. In his pape we also use job sa is ac ion as a p oxy o
job quali y and a emp o shed u he ligh on he issue, ough he examina ion o a
la ge numbe o EU coun ies. Fo his pu pose, we use se en wa es o he Eu opean
Communi y Household Panel (ECHP). The panel na u e o he da a allows us o use a
andom e ec s es ima o in o de o con ol o unobse able indi idual he e ogenei y.
The s udy akes ad an age om he ac ha pe iod o analysis is he same o all
coun ies. In addi ion, he da a is based on a s anda dized ques ionnai e and he
eg essions use he same ype o explana o y a iables and es ima ion p ocedu es. These
ea u es a e sui able o pe o m compa isons among coun ies.
The pape is o ganized as ollows. The nex sec ion desc ibes he da a and
p o ides e idence on epo ed le els o job sa is ac ion by low and highe paid wo ke s
wi hin ou een EU coun ies. Sec ion 3 e alua es he de e minan s o job sa is ac ion
o low and high paid wo ke s sepa a ely. Finally, sec ion 4 concludes.
The Da a and a iables
The da a used in his pape come om he Eu opean Communi y Household Panel
(ECHP). This is a yea ly panel o he EU-15 coun ies ca ied ou by he S a is ical
O ice o he Eu opean Communi ies (Eu os a ) in coope a ion wi h he Na ional
4
S a is ical O ice o each coun y. The da a collec ion s a ed in 1994 and was conduc ed
o e eigh consecu i e wa es. We make use all wa es o he ECHP, hus co e ing he
1994-2001 pe iod, o en o he EU-15 coun ies (Denma k, he Ne he lands, Belgium,
F ance, I eland, I aly, G eece, Spain and Po ugal). Fo Aus ia and Finland he
a ailable iles only co e he pe iod 1995-2001 and 1996-2001, espec i ely. Du ing he
pe iod 1994-1996 he da a o Ge many and Luxembou g come om wo di e en
sou ces and he o iginal ECHP iles a e mixed wi h he Ge man Socioeconomic Panel
(GSOEP) and he Luxembou g Household Panel (PSELL), espec i ely, whe eas o he
emaining wa es co e ing he pe iod 1997-2001 all he da a come exclusi ely om he
ECHP iles. These ECHP iles o Ge many and Luxembou g do no p o ide alid
answe s abou he ques ion on job sa is ac ion, whe eas he GSOEP and he PSELL do.
The e o e, o hese wo coun ies we can only use he in o ma ion co e ing he pe iod
1994-1996. Fo he UK he da a comes om wo di e en sou ces, he ECHP o he
pe iod 1994-2001 and he B i ish Household Panel Su ey (BHPS) o he pe iod 1994-
2001. Bo h da a sou ces p o ide alid answe s on he ques ion on job sa is ac ion. In
his s udy we use bo h su eys. Finally, he Swedish ECHP iles do no p o ide
in o ma ion on job sa is ac ion in any wa e. The e o e, his coun y is omi ed om ou
analysis.
The ECHP iles con ain in o ma ion no only a household, bu also e y
de ailed da a a indi idual le el such as demog aphic in o ma ion, employmen s a us,
job, educa ion, aining, ea nings, hou s wo ked, ype o con ac and a se o a iables
abou he ac i i y, size and sec o o hei employe s. To ou pu poses he su ey also
p o ides answe s on he le el o sa is ac ion abou some aspec s o he indi idual’s li e.
O hese ques ions, one e e s o he indi idual’s le el o sa is ac ion wi h his/he job,

5
whe e indi iduals a e asked o epo on a six-poin scale how sa is ied hey we e wi h
hei wo k o main ac i i y. The lowes le el o he scale s ands o wo ke s who we e
no sa is ied a all whe eas he highes s ands o ully sa is ied wo ke s. To ca y ou
ou analysis we selec males and emales aged bellow 65 ha a e sala y ea ne s wo king
in ei he he public o p i a e sec o . Thus, non-sala y ea ne s and sel -employed
d opped om he inal sample.
As usual in mos he li e a u e, a low-wage wo ke is de ined as an indi idual who
ea ns less han wo hi ds o he median hou ly wage. Fo his pu pose, hou ly wages
we e calcula ed as g oss mon hly wages di ided by he numbe o hou s wo ked pe
mon h. The co esponding alues we e ans o med o 2001 p ices h ough he
consume p ice index.
Raw di e ences job sa is ac ion be ween low and highe paid wo ke s
Table 1 includes he sample mean alues o job sa is ac ion b oken by he low-
pay h eshold. The e we also include he esul s conce ning he es o he hypo hesis o
equali y in he a e age job sa is ac ion be ween low-pay and highe pay wo ke s. The
esul s indica e ha he mean le el o job sa is ac ion is lowe o low pay wo ke s as
compa ed wi h he one epo ed by hei highe pay coun e pa s in mos o he
coun ies unde analysis.
--------- inse Table 1 abou he e ---------
This suppo s he idea ha low wage employmen in hese coun ies mainly
comp ises low quali y jobs and is consis en wi h he segmen ed labo ma ke heo y,
which claims he exis ence o good and bad jobs. The only clea excep ion o his
6
pa e n is he UK whe e low pay wo ke s signi ican ly epo a highe le el o
sa is ac ion[1]. This is in consis en wi h he o he esul s epo ed in p e ious s udies
o his coun y and in line wi h he no ion ha B i ish low pay wo ke s may ob ain
compensa ing di e ences in he o m o non-pecunia y bene i s (see Leon a idi and
Sloane, 2001, and Leon a idi e al., 2004).
In addi ion, he di e ence in job sa is ac ion be ween low and highe pay
wo ke s is much mo e p onounced in Sou he n Eu opean coun ies such as Po ugal,
Spain, G eece and I aly. This may indica e ha labo ma ke segmen a ion and he e o e
di e ences in job quali y, is less p ominen in he o he coun ies han in Sou he n o
Eu ope.
The de e minan s o job sa is ac ion
The Econome ic model
This sec ion desc ibes he econome ic model o be used in o de o assess he
de e minan s o job sa is ac ion o low paid jobs and o highe paid jobs sepa a ely. As
we ha e men ioned, he le el o sa is ac ion is epo ed on a six-poin o dinal scale.
The e o e, a sui able es ima o o ou pu poses is he o de ed p obi model. Howe e , a
common p oblem in o dinal scales is ha su eyed indi iduals may ha e a di e en
pe cep ion o he same scale. On he one hand, we migh expec ha indi idual’s
unobse ed ac o s such as he emo ional s a e o mood, which may a y ac oss
indi iduals, be also ele an o he ou come. On he o he hand, we also migh expec
he obse ed and unobse ed ac o s be co ela ed, which in u n may lead o
inconsis en es ima es. Gi en he panel na u e o ou da a, one way o dealing wi h his
p oblem would be he ixed-e ec s o de ed p obi model. Un o una ely, he e is no
7
a ailable o mula ion ye o es ima e such a model. Hence, one al e na i e op ion is he
andom-e ec s o de ed p obi model, which possesses he a ac i e ea u e ha allows
us o con ol o his indi idual’s unobse ed he e ogenei y, al hough i does no allow
o co ela ion be ween obse ed and unobse ed de e minan s o sa is ac ion. This
model is desc ibed below.
Assume ha he p opensi y o indi idual i o epo a ce ain le el o sa is ac ion
in pe iod is d i en by he ollowing s uc u e:
*' 1,..., ; 1,...,
i i i
SX i N T
β
=+ = = (1)
whe e *
i
S is he la en ou come, Xi a e he de e minan s o he ou come, ii i u +=
ε
wi h 222 1uui ) a (
σσσ
ε
+=+= and 2
u
2
u
1
σ
σ
ρ
+
=. The e m ui picks up he
indi idual’s unobse ed he e ogenei y, which is assumed no mally dis ibu ed wi h ze o
mean and a iance u
σ
, and
ε
i is a ime- a ying e o e m dis ibu ed as ),(N 10 .
No e ha we do no obse e *
i
Sbu obse e ins ead an indica o a iable o he
ype:
⎪
⎪
⎪
⎩
⎪
⎪
⎪
⎨
⎧
µ>
=µ≤<µ
µ≤
=−
4
*
i
j
*
i 1j
0
*
i
i
Si 6
4,3,2,1j,Si j
Si 1
S
(2)
The log-likelihood unc ion eads:
∑
=
=N
1i iT1i )S,...,S(PlogLogL (3)
8
De ining i ji X'a
β
µ
−= −1and i ji X'b
β
µ
−
=
we can w i e (3) as ollows:
[]
1
1
1
1
111
1
1
( ,..., ) ... ( ,..., ) ...
... ( | ) ( ) ...
() ( |) ( |)
iiT
iiT
iiT
iiT
bb
iiT iiTiiT
aa
bb
i i i i iT i
aa
T
ii ii ii
PS S d d
uudud d
ubuaudu
φ
φ
εφ εε
φ
+∞
−∞
+∞
=
−∞
==
==
=Φ−Φ
∫∫
∫∫∫
∏
∫
(4)
whe e
φ
and
Φ
deno e he densi y unc ion and he cumula i e dis ibu ion unc ion o
he no mal dis ibu ion, espec i ely. The e o e, he log-likelihood o his model can be
gene alized om he a gumen s made by Bu le and Mo i (1982). He e ogenei y is
handled by using he Gauss-He mi e quad a u e o in eg a e ou he join densi y (see
F eche e, 2001, o u he de ails).
Es ima ion esul s
In o de o iden i y he de e minan s o job sa is ac ion we elied on a ailable
e idence on he issue, which sugges s ha wages a e impo an bu do no explain he
whole a ia ion in epo ed le els o job sa is ac ion. Fo ins ance, Cla k (1997) inds
ha a e con olling o wages and o a la ge se o o he co a ia es, emales a e
happie a wo k han males. Mo eo e , i has been ound ha epo ed sa is ac ion
depends on a iables such he age o he wo ke , compa ison wage a es, le el o
educa ion, employe size, indus y, union membe ship s a us, egion, heal h s a us, ype
o employmen con ac , hou s o wo k and educa ional misma ches, among o he s (see,
o ins ance, Bo jas, 1979, Mille , 1990, Meng, 1990, Idson, 1990, Cla k, 1996 and
1997, Cla k and Oswald, 1996, Leon a idi and Sloane, 2001, Sousa-Poza and Sousa-
Poza, 2000 and Sloane and William, 2000 and Jones and Sloane, 2003). Fo he pu pose
15
Eu opean Commission (2001), Employmen in Eu ope 2001: Recen T ends and
P ospec s, in Employmen and Social A ai s, Chap e 4, Luxembou g.
Eu opean Commission (2002) Employmen in Eu ope 2002: Recen T ends and P ospec s,
in Employmen and Social A ai s, Chap e 3, Luxembou g.
F eche e, G. (2001), “Random-e ec s o de ed p obi ”, S a a Technical Bulle in, Vol.
59, Janua y, pp. 23-27.
F eeman, R. (1978) “Job sa is ac ion as an economic a iable”, Ame ican Economic
Re iew Pape s and P oceedings, Vol. 68 No.2, pp. 135-141.
Hame mesh, D. (1977), “Economic aspec s o job sa is ac ion”, in Ashen el e , O. and
Oa es, W. (Ed.), Essays in Labo Ma ke Analysis, John Wiley, New Yo k, pp. 53-
72.
Idson, T. (1990), “Es ablishmen size, job sa is ac ion and he s uc u e o wo k”,
Applied Economics, Vol. 22 No.8, pp. 1007-19.
Jones, R. and Sloane, P. (2003), “Low pay highe pay and job sa is ac ion in Wales”,
WELMERC Discussion pape Nº. 2003-03, Uni e si y o Wales Swansea.
Judge, T. and Wa anabe, S. (1993), “Ano he look a he job sa is ac ion - li e
sa is ac ion ela ionship”, Jou nal o Applied Psychology, Vol. 78 No. 6, pp. 939-
48.
Leon a idi, R. and Sloane, P. (2001), “Measu ing he Quali y o Jobs: P omo ion P ospec s,
Low Pay and Job Sa is ac ion”, LoWER Wo king Pape Nº. 07, Uni e si y o Ams e dam.
Leon a idi, R., Sloane, P. and Jones, R. (2004), “A e Low Paid Jobs o Low Quali y?
Some B i ish E idence”, WELMERC Discussion pape Nº. 2004-02, Uni e si y o
Wales Swansea.

16
Luci o a, C. and Sal e da, W. (1998), Policies o Low Wage Employmen and Social
Exclusion in Eu ope, F ancoAngeli, Milan.
Magione, T. and Quinn, R. (1975), “Job sa is ac ion, coun e p oduc i e beha iou and
d og used a wo k”, Jou nal o Applied Psychology, Vol. 60, pp. 114-16.
McE oy, G. and Cascio, W. (1985), “S a egies o educing employee u no e : a me a
analysis”, Jou nal o Applied Psychology, Vol. 70 No.2, pp. 342-53.
Meng, R. (1990), “The ela ionship be ween ade unions and job sa is ac ion”, Applied
Economics, Vol. 22 No.12, pp. 1635-48.
Mille , P. (1990), “T ade unions and job sa is ac ion”, Aus alian Economic Pape s,
Vol. 29 No.55, pp. 226-48.
OECD (1997), “Ea nings mobili y: aking a longe un iew”, in Employmen Ou look
1997, pp. 27-61, Pa is.
OECD (1996), “Ea nings inequali y, low-paid employmen and ea nings mobili y”, in
Employmen Ou look 1996, pp. 59-108, Pa is.
Sal e da, W., Bazen, S. and G ego y, M. (2001), The Eu opean-Ame ican employmen
gap, wage inequali y, ea nings mobili y and skill: a s udy o F ance; Ge many, he
Ne he lands, he Uni ed Kingdom and he Uni ed S a es, Eu opean Low-wage
Employmen Resea ch Ne wo k (LOWER), Final Repo , Uni e si y o Ams e dam.
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qui : e idence om he B is ish nu sing p o ession”, Economica, Vol. 69 No.274,
pp. 295-362.
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Labou , Vol. 14 No.3, pp. 473-501.
17
Sousa-Poza, A. and Sousa-Poza, A. (2000), “Taking ano he look a he gende /job
sa is ac ion pa adox”, Kyklos, Vol.53 No.2, pp. 135-52.
S ewa , M. and Swa ield, J. (1999), “Low pay dynamics and ansi ion p obabili ies”,
Economica, Vol.66 No.261, pp. 23-42.
V oom, V. (1964), Wo k and Mo i a ion, Wiley, New Yo k.
Woold idge, J.M. (2005), “Simple solu ions o he ini ial condi ions p oblem in
dynamic, nonlinea panel da a models wi h unobse ed he egenei y”, Jou nal o
Applied Econome ics, Vol.20 No.1, pp. 39-54.
18
Table 1 - Sample s a is ics and es o he equali y o means on epo ed low sa is ac ion
be ween low-pay and highe -pay wo ke s
Sample size Mean S anda d de ia ion Mean
Di e ence -s a is ic
Low-pay Highe -pay Low-pay Highe -pay Low-pay Highe -pay
Ge many 1,944 10,840 4.15 4.42 1.22 1.05 0.28 10.39
Denma k 1,486 18,424 4.96 4.94 1.09 0.97 -0.02 -0.60
The Ne he lands 3,580 30,632 4.73 4.75 0.98 0.87 0.02 1.11
Belgium 1,341 17,741 4.30 4.47 1.34 1.15 0.17 5.24
Luxembou g 537 2,177 4.43 4.84 1.26 1.01 0.41 8.05
F ance 6,026 35,073 4.25 4.45 1.19 1.02 0.20 13.97
UK 6,444 36,145 4.41 4.32 1.33 1.23 -0.08 -4.96
I eland 3,010 13,715 4.38 4.65 1.33 1.15 0.26 11.04
I aly 3,813 37,039 3.31 4.11 1.44 1.24 0.81 37.65
G eece 3,134 17,243 3.13 4.02 1.21 1.18 0.89 38.91
Spain 5,919 29,048 3.83 4.35 1.41 1.21 0.52 29.16
Po ugal 4,232 30,508 3.68 4.07 1.04 0.89 0.40 26.71
Aus ia 1,922 17,459 4.75 4.97 1.19 0.96 0.22 9.16
Finland 1,492 16,334 4.49 4.59 1.11 0.96 0.10 3.79
19
Annex
Random e ec s o de ed p obi es ima es
Ge many Denma k
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) 0.021 0.006 0.22 0.393 0.083 6.63 -0.133 -0.039 -1.67 0.263 0.041 4.14
log(weekly hou s) -0.061 -0.017 -0.38 0.277 0.059 2.67 -0.038 -0.011 -0.32 0.363 0.057 4.40
Age -0.015 -0.004 -0.70 -0.061 -0.013 -4.99 -0.038 -0.011 -1.77 -0.032 -0.005 -3.31
Age Squa ed/100 0.019 0.006 0.69 0.085 0.018 5.73 0.066 0.019 2.34 0.051 0.008 4.40
Gende (Male) -0.097 -0.028 -1.05 -0.215 -0.045 -4.57 0.090 0.026 1.06 0.008 0.001 0.22
Seconda y Educa ion 0.021 0.006 0.18 0.085 0.018 1.81 -0.043 -0.013 -0.39 0.006 0.001 0.20
P ima y o lowe Educa ion 0.111 0.032 0.83 0.091 0.019 1.57 0.150 0.044 1.23 0.012 0.002 0.28
Good Heal h S a us 0.423 0.122 5.34 0.427 0.090 12.19 0.291 0.086 2.89 0.364 0.057 11.04
P e iously unemployed -0.167 -0.048 -2.10 -0.148 -0.031 -3.01 0.064 0.019 0.77 -0.023 -0.004 -0.64
Job cha ac e is ics
O e skilled -0.256 -0.073 -3.48 -0.251 -0.053 -7.19 -0.300 -0.088 -3.78 -0.216 -0.034 -7.97
Use o languages 0.390 0.112 3.29 -0.038 -0.008 -0.89 0.070 0.021 0.78 -0.057 -0.009 -1.97
T aning a he momen 0.129 0.037 1.67 0.036 0.008 1.17 0.045 0.013 0.58 0.042 0.007 1.93
Pe manen con ac 0.183 0.052 1.99 0.121 0.026 2.25 0.200 0.059 2.37 -0.006 -0.001 -0.16
Full- ime -0.142 -0.041 -1.06 -0.129 -0.027 -1.60 -0.077 -0.023 -0.68 -0.153 -0.024 -2.73
Public wo ke -0.018 -0.005 -0.18 0.037 0.008 0.75 0.134 0.039 1.47 0.019 0.003 0.57
µ1 -2.700 -4.03 -1.923 -4.43 -3.355 -6.57 -1.651 -4.55
µ2 -1.971 -2.96 -1.185 -2.74 -2.724 -5.45 -1.057 -2.92
µ3 -1.007 -1.52 -0.140 -0.32 -2.116 -4.29 -0.381 -1.05
µ4 0.000 0.00 0.956 2.21 -1.263 -2.58 0.642 1.77
µ5 1.552 2.35 2.738 6.32 -0.068 -0.14 2.183 6.03
ρ 0.414 11.75 0.412 32.29 0.291 5.94 0.409 41.02
Log-likelihood -2,858
-13,789 -1,919 -21,558
LR Chi- es 159 596 112 612
# o obse a ions 1,944 10,484 1,486 18,218
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .
20
Random e ec s o de ed p obi es ima es
The Ne he lands Belgium
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) 0.059 0.014 1.63 0.143 0.043 5.15 0.145 0.035 1.29 0.357 0.046 6.92
log(weekly hou s) -0.063 -0.015 -0.71 0.035 0.010 0.70 0.580 0.140 3.76 0.539 0.070 7.48
Age -0.065 -0.016 -4.60 -0.062 -0.018 -8.43 -0.112 -0.027 -3.88 -0.070 -0.009 -6.83
Age Squa ed/100 0.088 0.021 4.52 0.077 0.023 8.57 0.151 0.037 3.99 0.090 0.012 7.05
Gende (Male) -0.026 -0.006 -0.49 0.071 0.021 3.52 -0.067 -0.016 -0.71 -0.145 -0.019 -5.40
Seconda y Educa ion 0.099 0.024 1.04 0.053 0.016 2.12 0.174 0.042 1.68 -0.003 0.000 -0.08
P ima y o lowe Educa ion 0.043 0.010 0.46 0.042 0.013 1.53 0.210 0.051 1.81 0.072 0.009 1.92
Good Heal h S a us 0.311 0.074 5.32 0.347 0.104 17.24 0.322 0.078 3.26 0.404 0.052 14.59
P e iously unemployed -0.098 -0.023 -1.72 -0.026 -0.008 -1.14 0.086 0.021 0.94 -0.030 -0.004 -0.91
Job cha ac e is ics
O e skilled -0.157 -0.038 -3.62 -0.103 -0.031 -6.72 -0.427 -0.103 -5.14 -0.203 -0.026 -8.99
Use o languages -0.032 -0.008 -0.58 0.001 0.000 0.04 -0.076 -0.018 -0.76 0.028 0.004 1.06
T aning a he momen -0.090 -0.022 -1.58 -0.053 -0.016 -2.33 0.042 0.010 0.45 0.009 0.001 0.39
Pe manen con ac 0.145 0.035 3.01 0.007 0.002 0.25 0.050 0.012 0.52 -0.011 -0.001 -0.33
Full- ime -0.029 -0.007 -0.42 -0.124 -0.037 -3.61 -0.404 -0.097 -2.92 -0.256 -0.033 -5.06
Public wo ke -0.014 -0.003 -0.22 0.022 0.006 1.11 0.050 0.012 0.48 0.108 0.014 3.90
µ1 -3.917 -10.78 -3.632 -16.33 -1.436 -1.90 -0.874 -2.60
µ2 -3.242 -9.12 -3.026 -13.71 -0.881 -1.17 -0.300 -0.89
µ3 -2.511 -7.13 -2.284 -10.38 -0.007 -0.01 0.496 1.48
µ4 -1.493 -4.26 -1.133 -5.15 0.810 1.08 1.493 4.45
µ5 0.008 0.02 0.597 2.72 2.028 2.71 2.944 8.76
ρ 0.258 10.58 0.286 36.11 0.383 9.59 0.370 36.36
Log-likelihood -4,580
-35,238 -2,022 -23,516
LR Chi- es 120 695 142 802
# o obse a ions 3,580 30,627 1,341 17,425
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .

21
Random e ec s o de ed p obi es ima es
Luxembou g F ance
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) -0.198 -0.053 -0.73 0.651 0.149 4.09 -0.146 -0.047 -3.25 0.414 0.027 14.05
log(weekly hou s) 0.627 0.168 1.54 0.116 0.026 0.33 0.010 0.003 0.13 0.490 0.033 10.01
Age -0.052 -0.014 -1.01 -0.087 -0.020 -2.44 -0.017 -0.005 -1.36 -0.033 -0.002 -4.28
Age Squa ed/100 0.062 0.017 0.90 0.107 0.025 2.41 0.018 0.006 1.10 0.035 0.002 3.62
Gende (Male) -0.599 -0.160 -2.99 -0.292 -0.067 -2.53 -0.049 -0.016 -1.14 -0.091 -0.006 -4.05
Seconda y Educa ion -0.534 -0.143 -1.40 -0.144 -0.033 -1.14 0.027 0.009 0.51 0.002 0.000 0.07
P ima y o lowe Educa ion -0.407 -0.109 -1.10 0.072 0.016 0.52 0.058 0.019 1.07 0.082 0.005 2.77
Good Heal h S a us 0.373 0.100 2.50 0.272 0.062 3.09 0.446 0.143 12.36 0.439 0.029 26.37
P e iously unemployed -0.447 -0.120 -1.93 -0.361 -0.082 -1.85 -0.107 -0.034 -2.43 -0.050 -0.003 -1.59
Job cha ac e is ics
O e skilled -0.617 -0.165 -3.83 -0.301 -0.069 -3.46 -0.275 -0.088 -8.09 -0.181 -0.012 -11.28
Use o languages 0.171 0.046 0.76 -0.045 -0.010 -0.28 0.133 0.043 2.25 0.047 0.003 2.07
T aning a he momen -0.053 -0.014 -0.26 0.031 0.007 0.38 0.190 0.061 3.99 0.062 0.004 2.94
Pe manen con ac -0.212 -0.057 -0.96 0.031 0.007 0.16 0.020 0.006 0.46 0.076 0.005 2.29
Full- ime -0.380 -0.102 -1.20 -0.012 -0.003 -0.05 0.060 0.019 0.92 -0.148 -0.010 -3.83
Public wo ke 0.288 0.077 0.94 0.370 0.084 2.83 0.139 0.045 2.72 0.240 0.016 9.81
µ1 -2.286 -1.38 -2.629 -1.96 -2.019 -5.81 -0.442 -1.95
µ2 -1.791 -1.08 -1.955 -1.46 -1.584 -4.56 0.067 0.30
µ3 -1.079 -0.65 -1.205 -0.90 -0.919 -2.65 0.818 3.61
µ4 -0.103 -0.06 -0.046 -0.03 0.082 0.24 2.067 9.12
µ5 1.701 1.04 1.772 1.32 1.740 5.01 4.025 17.71
ρ 0.458 7.42 0.503 18.69 0.280 14.91 0.364 48.06
Log-likelihood -730
-2,601 -8,424 -37,928
LR Chi- es 76 156 481 1807
# o obse a ions 537 2,172 6,026 31,750
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .
22
Random e ec s o de ed p obi es ima es
UK I eland
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) -0.109 -0.011 -1.83 0.239 0.063 8.32 0.272 0.052 2.78 0.261 0.076 5.34
log(weekly hou s) -0.052 -0.005 -0.70 -0.093 -0.025 -2.17 0.347 0.066 2.99 0.030 0.009 0.40
Age -0.047 -0.005 -4.30 -0.039 -0.010 -6.44 -0.032 -0.006 -1.87 -0.042 -0.012 -4.52
Age Squa ed/100 0.070 0.007 4.79 0.056 0.015 7.32 0.048 0.009 2.06 0.062 0.018 5.27
Gende (Male) -0.251 -0.026 -4.83 -0.281 -0.074 -12.18 -0.153 -0.029 -2.20 -0.184 -0.053 -4.79
Seconda y Educa ion 0.009 0.001 0.15 0.059 0.016 2.61 0.144 0.027 1.80 0.047 0.014 1.23
P ima y o lowe Educa ion 0.102 0.010 2.00 0.193 0.051 8.05 0.271 0.052 3.01 0.076 0.022 1.55
Good Heal h S a us 0.247 0.025 6.16 0.231 0.061 13.42 0.239 0.046 2.71 0.402 0.117 9.10
P e iously unemployed -0.125 -0.013 -2.46 -0.046 -0.012 -1.72 -0.257 -0.049 -3.80 -0.202 -0.059 -5.00
Job cha ac e is ics
O e skilled -0.351 -0.036 -4.31 -0.233 -0.061 -7.54 -0.325 -0.062 -6.36 -0.284 -0.082 -11.52
Use o languages -0.566 -0.058 -3.30 -0.001 0.000 -0.02 0.160 0.030 1.27 0.106 0.031 2.31
T aning a he momen -0.017 -0.002 -0.41 -0.008 -0.002 -0.56 0.007 0.001 0.10 -0.083 -0.024 -3.02
Pe manen con ac 0.283 0.029 4.90 0.074 0.020 2.34 0.183 0.035 3.03 0.108 0.031 2.83
Full- ime -0.239 -0.024 -3.67 -0.156 -0.041 -4.23 -0.139 -0.026 -1.42 0.089 0.026 1.57
Public wo ke 0.271 0.028 4.16 -0.048 -0.013 -2.04 0.060 0.011 0.60 0.120 0.035 3.20
µ1 -3.558 -11.08 -2.956 -16.09 -1.014 -2.03 -2.417 -7.82
µ2 -2.950 -9.23 -2.271 -12.38 -0.498 -1.00 -1.806 -5.86
µ3 -2.352 -7.37 -1.701 -9.28 0.284 0.57 -1.026 -3.33
µ4 -1.358 -4.27 -0.628 -3.43 1.226 2.45 -0.007 -0.02
µ5 0.297 0.93 1.248 6.81 2.243 4.47 1.260 4.08
ρ 0.534 37.11 0.500 84.03 0.383 14.18 0.394 34.81
Log-likelihood -10,711
-57,298 -4,592 -18,644
LR Chi- es 529 1233 174 548
# o obse a ions 7,526 42,783 3,010 13,700
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .
23
Random e ec s o de ed p obi es ima es
I aly G eece
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) 0.473 0.051 5.10 0.894 0.081 23.31 0.492 0.008 5.02 0.831 0.010 21.99
log(weekly hou s) 0.668 0.073 5.56 0.786 0.071 15.33 0.761 0.012 6.99 0.837 0.010 15.05
Age -0.037 -0.004 -2.15 -0.046 -0.004 -6.74 -0.035 -0.001 -2.48 -0.017 0.000 -2.13
Age Squa ed/100 0.038 0.004 1.67 0.052 0.005 6.19 0.038 0.001 2.03 0.015 0.000 1.61
Gende (Male) -0.077 -0.008 -1.18 -0.112 -0.010 -4.31 -0.036 -0.001 -0.68 -0.139 -0.002 -6.02
Seconda y Educa ion -0.161 -0.018 -1.23 0.011 0.001 0.32 -0.121 -0.002 -1.61 -0.040 0.000 -1.39
P ima y o lowe Educa ion -0.217 -0.024 -1.71 -0.039 -0.004 -1.05 -0.204 -0.003 -2.40 -0.154 -0.002 -4.22
Good Heal h S a us 0.295 0.032 5.17 0.266 0.024 16.40 0.089 0.001 0.98 0.100 0.001 2.62
P e iously unemployed -0.059 -0.006 -0.97 -0.114 -0.010 -4.00 -0.096 -0.002 -1.85 -0.139 -0.002 -5.25
Job cha ac e is ics
O e skilled -0.059 -0.006 -1.14 -0.076 -0.007 -4.89 -0.287 -0.005 -5.89 -0.180 -0.002 -9.23
Use o languages 0.112 0.012 0.86 0.049 0.004 1.67 0.181 0.003 2.09 0.091 0.001 3.11
T aning a he momen 0.117 0.013 1.27 0.088 0.008 4.15 0.191 0.003 2.28 0.210 0.003 6.35
Pe manen con ac 0.187 0.020 3.39 0.201 0.018 7.69 0.469 0.007 9.44 0.413 0.005 14.82
Full- ime 0.024 0.003 0.22 -0.057 -0.005 -1.56 -0.016 0.000 -0.14 0.156 0.002 3.08
Public wo ke 0.475 0.052 4.72 0.156 0.014 6.74 0.410 0.007 4.75 0.372 0.005 14.20
µ1 0.237 0.45 1.087 4.56 1.446 2.53 1.745 6.93
µ2 1.258 2.40 1.904 7.98 2.451 4.28 2.587 10.28
µ3 2.288 4.36 2.883 12.07 3.600 6.27 3.710 14.70
µ4 3.200 6.08 4.002 16.74 4.636 8.05 4.805 18.97
µ5 4.358 8.23 5.279 22.03 5.590 9.65 5.938 23.36
ρ 0.484 21.56 0.411 62.17 0.264 10.49 0.203 22.46
Log-likelihood -5,896
-51,525 -4,548 -23,947
LR Chi- es 592 2717 538 2784
# o obse a ions 3,813 36,238 3,134 17,210
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .
24
Random e ec s o de ed p obi es ima es
Spain Po ugal
Low-wage Highe -wage Low-wage Highe -wage
Coe . APE z- alue Coe . APE z- alue Coe . APE z- alu
e
Coe . APE z- alue
log(hou ly wage) 0.296 0.100 4.72 0.422 0.099 14.20 0.077 0.014 1.23 0.684 0.084 19.93
log(weekly hou s) 0.119 0.040 1.56 0.311 0.073 5.85 0.571 0.101 4.89 0.670 0.082 10.15
Age -0.029 -0.010 -3.17 -0.062 -0.015 -10.91 -0.026 -0.005 -1.98 -0.015 -0.002 -2.26
Age Squa ed/100 0.030 0.010 2.57 0.078 0.018 11.12 0.031 0.005 1.83 0.012 0.001 1.49
Gende (Male) -0.128 -0.043 -3.44 -0.126 -0.030 -6.10 -0.039 -0.007 -0.60 -0.009 -0.001 -0.31
Seconda y Educa ion 0.078 0.026 1.35 0.011 0.003 0.44 -0.694 -0.122 -2.49 -0.007 -0.001 -0.16
P ima y o lowe Educa ion 0.255 0.086 4.52 0.105 0.025 4.03 -0.736 -0.130 -2.73 -0.010 -0.001 -0.21
Good Heal h S a us 0.207 0.070 5.07 0.253 0.059 12.76 0.008 0.001 0.16 0.096 0.012 5.05
P e iously unemployed -0.206 -0.070 -6.11 -0.089 -0.021 -4.46 -0.231 -0.041 -3.49 -0.164 -0.020 -4.81
Job cha ac e is ics
O e skilled -0.190 -0.064 -5.88 -0.140 -0.033 -9.32 -0.172 -0.030 -3.56 -0.109 -0.013 -6.28
Use o languages -0.100 -0.034 -1.18 0.021 0.005 0.72 0.487 0.086 3.15 -0.024 -0.003 -0.70
T aning a he momen 0.024 0.008 0.54 0.010 0.002 0.56 -0.024 -0.004 -0.27 0.049 0.006 1.66
Pe manen con ac 0.135 0.046 3.60 0.110 0.026 5.60 0.313 0.055 5.82 0.245 0.030 10.67
Full- ime -0.017 -0.006 -0.24 -0.008 -0.002 -0.17 0.174 0.031 1.41 0.129 0.016 2.12
Public wo ke 0.227 0.077 3.29 0.130 0.031 5.74 -0.006 -0.001 -0.05 0.223 0.027 8.14
µ1 -1.505 -5.04 -1.351 -6.46 -1.361 -2.61 -0.121 -0.47
µ2 -0.792 -2.66 -0.683 -3.27 -0.298 -0.57 0.683 2.68
µ3 -0.086 -0.29 0.083 0.40 0.902 1.74 1.789 7.02
µ4 0.604 2.03 0.925 4.43 2.853 5.48 3.916 15.32
µ5 1.665 5.57 2.249 10.75 3.812 7.29 5.414 21.11
ρ 0.177 10.15 0.242 32.52 0.467 22.96 0.435 58.58
Log-likelihood -9,674
-41,872 -5,435 -33,184
LR Chi- es 496 1872 320 1962
# o obse a ions 5,919 29,000 4,232 30,318
No e: Es ima es also include dummy con ols o employe acili ies (insu ance, housing, aining and leisu e), employe size, occupa ions, indus y,
egion and yea .