A new estimate of discouraged and additional worker effects on labor participation by sex and age in oecd countries
Abstract
This article proposes a new approach to estimate the effect of the unemployment rate on the labor participation ratio by sex and age. OECD labor participation ratios are estimated within an unobservable component model with the Kalman filter. This allows for treating the trend of the participation rate as a stochastic time varying parameter. This improves the quality of the econometric results by allowing for a better identification of changes in the trend than the most common alternatives using determinist and logistic trends. Moreover the use of cross-section OECD circumvents the problem of the lack of long time series data. We find that OECD labor participation ratio are sensitive to the labor market situation in all sex and age categories and that the discouraged worker effect dominates the additional worker effect although the latter is clearly present for women.Download Info
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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2012-09.Length:
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:fce:doctra:1209
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Keywords: labor force participation; unemployment; flexion effects; additional/discouraged worker effect; OECD; cross-section estimation; Kalman filter;Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
- NEP-LAB-2012-03-21 (Labour Economics)
- NEP-LMA-2012-03-21 (Labor Markets - Supply, Demand, & Wages)
References
References listed on IDEASPlease 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.:
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- Robert J. Gordon, 1997.
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- Robert J. Gordon, 1997. "The Time-Varying NAIRU and its Implications for Economic Policy," NBER Working Papers 5735, National Bureau of Economic Research, Inc.
- Heyer, Eric & Reynes, Frederic & Sterdyniak, Henri, 2007. "Structural and reduced approaches of the equilibrium rate of unemployment, a comparison between France and the United States," Economic Modelling, Elsevier, vol. 24(1), pages 42-65, January.
- Christophe Hurlin & Valérie Mignon, 2007. "Second Generation Panel Unit Root Tests," Working Papers halshs-00159842, HAL.
- Kodde, David A., 1988. "Unemployment expectations and human capital formation," European Economic Review, Elsevier, vol. 32(8), pages 1645-1660, October.
- Tano, Doki K., 1993. "The added worker effect : A causality test," Economics Letters, Elsevier, vol. 43(1), pages 111-117.
- Valérie Chauvin & Mathieu Plane, 2001. "2000-2040 : population active et croissance," Revue de l'OFCE, Presses de Sciences-Po, vol. 79(4), pages 235-259.
- Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
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