Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Defining Spells

04/30/2004

A central, and complicated, analytic issue is how to define job, employment, and nonemployment spells (that is, the rules used to assign zeros and positive codes to the dependent variables discussed above). To facilitate this discussion, we first list the five possible states into which a low-wage worker could exit:

  1. Another low-wage job (or business)
  2. A higher-wage job with the same employer
  3. A higher-wage job with a different employer
  4. Unemployment
  5. Not in the labor force

Using these possible exit states, we conducted duration analyses for four types of job and employment spells, each of which addresses a slightly different analytic question:

  1. Low-Wage Job Spells. The duration of these spells was measured from the start of the low-wage job until the worker exited into any of the five states listed above (or, for right-censored spells, until the end of the panel period). These spells were used to address the extent to which low-wage workers remain in their initial jobs and continue to receive low pay.
  2. Job Spells. These spells pertain to the period the worker was employed with the initial employer regardless of the wage level that the worker received (that is, until the worker exited into state 1, 3, 4, or 5). Thus, these spells provide information on the amount of time low-wage workers remain with their initial employer. These spells will produce different results than the low-wage job spells if low-wage workers experience wage growth within their jobs.
  3. Low-Wage Employment Spells. The duration of these spells was measured from the start of the low-wage job spell until the worker left all low-wage employment (that is, until they exited into state 2, 3, 4, or 5). This duration includes continuous changes from one low-wage job spell to another. Results using these spells will differ from those using the low-wage job spells if low-wage workers move directly from one low-wage job to another.
  4. Employment Spells. These spells provide information on the time between job start and when the worker became nonemployed (that is, until the worker exited into state 4 or 5). Thus, these spells pertain to the number of months that the worker was employed in any job, regardless of the wage level. Duration results based on these spells will differ from those based on the other spells if low-wage workers move seamlessly between employers and across wage levels.

Similar procedures were used to construct spells for those who began medium- and high-wage jobs during the panel period.

We examined two types of spells for our analyses of reentry into the low-wage labor market. First, we examined the rate at which those who exited their low-wage jobs into nonemployment (that is, into exit states 4 and 5) returned to the low-wage and higher-wage labor markets. Second, we examined the extent to which those who exited their low-wage jobs into higher-wage jobs returned to the low-wage sector.

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