Low pay, higher pay and job quality: empirical evidence for Portugal

Abstract

This paper examines to what extent low pay jobs can be considered of low quality. For this purpose, we use three waves (1997–1999) of the European Community Household Panel (ECHP) for Portugal. The results indicate that low pay workers report a lower level of job satisfaction when compared with their higher paid counterparts. Moreover, some of the determinants of job satisfaction differ between these two types of workers. This supports the idea that low wage employment mainly comprises low quality jobs and is consistent with the segmented labour market theory, which claims the existence of good and bad jobs. This is, however, at odds with some empirical evidence recently reported for the British labour market where low pay individuals report a higher level of satisfaction, which is more in line with the notion that these workers obtain compensating differences in the form of non-pecuniary benefits.

Acknowledgments

The first author is indebted to Instituto Nacional de Estatística (INE) for providing access to the European Community Household Panel (ECHP). Financial support from the Portuguese Science Foundation and FEDER, under Grant POCTI/ECO37668/2001 is also acknowledged.