Thomas K . Bauer , and Peggy David Labour Market Entry Conditions , Wages and Job Mobility

Economic conditions at the time of labour market entry can induce wage diff erentials between workers entering the labour market at diff erent points in time. While the existence and persistence of these entry wage diff erentials are well documented, little is known about their interaction with employees’ mobility behaviour. This paper contributes to this research area by analyzing the interaction between job mobility and entry wage diff erentials using German administrative data. The results suggest that labour market entrants earning less than the average starting wage are more likely to change jobs, directly from employer to employer as well as indirectly via an unemployment spell. In addition they are more likely to change occupation. Moreover, job mobility tends to reduce the eff ects of labour market entry conditions, implying that job mobility operates as an adjustment mechanism that mitigates entry wage diff erentials. These results hold not only for high-skilled, but also for medium-skilled and unskilled workers. JEL Classifi cation: E24, J31, J62, J64