The low paid workforce and labour market transitions: assessing the impact of unemployment on earnings at the bottom of the labour market

One of the most important labour market transitions a person can make is from unemployment into paid work. How does the experience of unemployment influence a person’s subsequent earnings? Using longitudinal data from the [Household, Income and Labour Dynamics in Australia] HILDA Survey, this paper examines the impact on a worker’s current earnings of previous experiences of unemployment, as well as a longer-term history of unemployment. The framework adopted in this paper is one of labour market segmentation, based on occupational segments. This recasts the question as: what impact does unemployment have on the low paid workforce, particularly the wages structure at the bottom of the labour market? The findings suggest that in recent times the wages floor in Australia has remained intact.