State Dependence and Labor Market Transitions in the European Union

This article proposes an empirical analysis of labor market mobility in the European Union based on EU-SILC data. It uses conditional dynamic multinomial logit models that allow state dependence and unobserved heterogeneity to be disentangled. The article investigates state dependence in quarterly labor market transitions among fulltime employment, part-time employment, unemployment and inactivity, comparing across five country groups (the UK, continental, eastern, nordic and southern). It shows that state dependence in unemployment or inactivity is generally lower in the UK than in other country groups except the nordic group. The persistence of part-time employment appears higher than in the UK for all groups, especially in continental countries. Differences by social group (according to age, sex and education) are also found at the European level and vary across country groups.