NPC Working Paper #04-8

May 2004

Escaping Low Earnings: the Role of Employer Characteristics and Changes

Harry J. Holzer, Georgetown University, The Urban Institute. Julia I. Lane, The Urban Institute, US Census Bureau. Lars Vilhuber, Cornell University.

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In this paper, we analyze the extent to which escape from or entry into low earnings among adult workers is associated with changes in their employers and firm characteristics. We do so using a unique dataset based on individual Unemployment Insurance wage records that are matched to other Census data.

Our results show considerable mobility into and out of low earnings status, even for adults. They indicate that job changes are an important part of the process by which workers escape or enter low-wage status, and that changes in employer characteristics help to account for these changes. Matches between personal and firm characteristics also contribute to observed earning outcomes.