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Earnings capacity and labour market participation

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Author Info
Soest, A van
Fontein, P.
Euwals, R (Tilburg University, Center for Economic Research)

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Abstract

We analyze models for individuals' labour market state. We distinguish between full-time and part-time work, but also between various types of economic inactivity, i.e. unemployment, disability, early retirement and working in the household. We consider the impact on the state probabilities of individual attributes, with emphasis on earnings capacity. We take account of the problem that only earnings of workers are observed, and of the potential endogeneity of earnings. We generalize the multinomial logit model, allowing for unobserved heterogeneity. Moreover, we allow for non-linearities due to, for example, minimum wages. Using micro-data from the Dutch Socio-Economic Panel, we look at static models and compare results for various years. Finally, we also look at dynamic models, in which the transition probabilities from employment into various inactivity states are modelled, conditional on job characteristics.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 57.

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Date of creation: 1996
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Handle: RePEc:dgr:kubcen:199657

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Keywords: labour models;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-62, March. [Downloadable!] (restricted)
  2. Meyer, Robert H & Wise, David A, 1983. "The Effects of the Minimum Wage on the Employment and Earnings of Youth," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 66-100, January. [Downloadable!] (restricted)
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  3. Stern, Steven, 1996. "Semiparametric estimates of the supply and demand effects of disability on labor force participation," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 49-70. [Downloadable!] (restricted)
  4. Blundell, Richard William & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," CEPR Discussion Papers 149, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November. [Downloadable!] (restricted)
  6. Lee, Lung-Fei, 1982. "Some Approaches to the Correction of Selectivity Bias," Review of Economic Studies, Blackwell Publishing, vol. 49(3), pages 355-72, July. [Downloadable!] (restricted)
  7. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier. [Downloadable!] (restricted)
  8. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 5-33, September. [Downloadable!] (restricted)
  9. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August. [Downloadable!] (restricted)
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Cited by:
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  1. Boockmann, Bernhard, 2002. "Mixed motives : an empirical analysis of ILO roll-call votes," ZEW Discussion Papers 02-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  2. Paul Frijters & Bas van der Klaau, 2003. "Job Search with Nonparticipation," Paul Frijters Discussion Papers 2003-3, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
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  3. Owen O'Donnell, 1998. "The Effect of Disability on Employment Allowing for Work Incapacity," Studies in Economics 9813, Department of Economics, University of Kent. [Downloadable!]
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