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Unemployment Benefits and Labor Market Transitions: A Multinomial Logit Model with Errors in Classification

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Poterba, James M
Summers, Lawrence H

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Abstract

This paper utilizes validation data on survey response error in the Current Population Survey to generalize the standard multinomial logit model to allow for spurious events that result from classification error. The authors' basic approach could be used with other stochastic models of discrete events as well. They illustrate their algorithm by studying the effect of unemployment insurance on transitions from unemployment to employment and on labor-force withdrawal. Their results confirm earlier work suggesting that unemployment insurance lengthens unemployment spells and show that correcting for classification error strengthens the apparent effect of unemployment insurance on spell durations. Copyright 1995 by MIT Press.

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Publisher Info
Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 77 (1995)
Issue (Month): 2 (May)
Pages: 207-16
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Handle: RePEc:tpr:restat:v:77:y:1995:i:2:p:207-16

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  1. Schmidt, Christoph M, 1999. "Persistence and the German Unemployment Problem: Empirical Evidence on German Labour Market Flows," CEPR Discussion Papers 2057, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Arthur Lewbel, 2003. "Estimation of Average Treatment Effects With Misclassification," Boston College Working Papers in Economics 556, Boston College Department of Economics, revised 04 Sep 2006. [Downloadable!]
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  3. Francesco Pastore, 2005. "To Study or to Work? Education and Labour Market Participation of Young People in Poland," IZA Discussion Papers 1793, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Michael P. Keane & Robert M. Sauer, 2006. "Classification Error in Dynamic Discrete Choice Models: Implications for Female Labor Supply Behavior," IZA Discussion Papers 2332, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Concha Artola & Una-Louise Bell, 2001. "Measuring Labour Market Dynamics: An Application To Spain," Departmental Working Papers 145, Tor Vergata University, CEIS. [Downloadable!]
  6. Robert Dixon & John Freebairn & G. C. Lim, 2002. "Why Are Recessions As Deep As They Are? The Behaviour Over Time Of The Outflow From Unemployment: A New Perspective," Department of Economics - Working Papers Series 842, The University of Melbourne. [Downloadable!]
  7. Artola, Concha & Bell, Una Louise, 2001. "Identifying labour market dynamics using labour force survey data," ZEW Discussion Papers 01-44, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. Trivellato, Ugo & Giraldo, Anna, 2003. "Assessing the 'Choosiness' of Job Seekers. An Exploratory Approach and Evidence for Italy," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  9. Christoph M. Schmidt, 1999. "The Heterogeneity and Cyclical Sensitivity of Unemployment: An Exploration of German Labor Market Flows," IZA Discussion Papers 84, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Donald S. Kenkel & Dean R. Lillard & Alan D. Mathios, 2004. "Accounting for misclassification error in retrospective smoking data," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1031-1044. [Downloadable!]
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