Is it Easier to Escape from Low Pay in Urban Areas? Evidence from the United Kingdom

In this paper we compare periods of low-paid employment between urban and rural areas in the United Kingdom. Using the British household panel survey, we estimate the probability that a period of low-paid employment will end, followed by a number of possible outcomes, namely a higher-paid job, self-employment, unemployment, and leaving the labour force. The results show that there are statistically significant differences in the dynamics of low pay across urban and rural labour markets, particularly in terms of exits to higher pay and out of the labour force. After controlling for different personal and job characteristics across markets, urban low-pay durations are somewhat shorter on average, with a higher probability of movement to a higher-paid job. The results suggest that any urban–rural differences in the typical low-pay experience are concentrated among certain types of individuals, such as young workers and women without qualifications.