Labor force participation and the discouraged worker effect
AbstractThis article analyzes labor force participation with particular reference to the discouraged worker effect. Discouraged workers are those who will search for work when the labor market is tight but do not search for work when the labor market is slack because they consider their chances of finding a suitable job too low. The theoretical point of departure is a search model where the worker evaluates the expected utility of searching for work and decides to participate in the labor market if the expected utility of search exceeds the utility of not working. From this framework, we derive an empirical model for the probability that the worker will be out of the labor force, unemployed, or employed. The model is estimated on a sample of married and cohabitating women in Norway covering the period from 1988 to 2008. The results show that the discouraged worker effect is substantial. On average, about one-third of those who are out of the labor force are discouraged, according to our analysis. Copyright Springer-Verlag 2013
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Bibliographic InfoArticle provided by Springer in its journal Empirical Economics.
Volume (Year): 45 (2013)
Issue (Month): 1 (August)
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Other versions of this item:
- John K. Dagsvik & Tom Kornstad & Terje Skjerpen, 2010. "Labor force participation and the discouraged worker effect," Discussion Papers 642, Research Department of Statistics Norway.
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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