Using representative linked employer-employee data of the German Federal Employment Agency, this paper shows that just one out of seven full-time employees who earned low wages (i.e. less than two-thirds of the median wage) in 1998/99 was able to earn wages above the low-wage threshold in 2003....

Using representative linked employer-employee data of the German Federal Employment Agency, this paper shows that just one out of seven full-time employees who earned low wages (i.e. less than two-thirds of the median wage) in 1998/99 was able to earn wages above the low-wage threshold in 2003....

In the empirical literature on the estimation of firm and worker heterogeneity using linked employer-employee data, unobserved worker quality appears to be negatively correlated with unobserved firm quality. We investigate the possibility that this is simply caused by standard estimation error...