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State Dependence in a Multi-state Model of Employment

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Abstract

A multinomial choice framework is used to investigate the nature of women's transitions between full-time employment, part-time employment and non-employment. The stochastic framework allows time varying and time invariant unobserved preferences, and also controls for the possible endogenity of education, fertility and non-labor income. Significant positive true state dependence is found in both full-time and part-time employment. This finding is robust to the specification of unobserved preferences. The results are used the assess the dynamic effects of three temporary wage subsidies. All three policies have substantial effects on employment behavior for up to 6 years. However, obtaining a permanent increase in employment requires sustained or repeated interventions.

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File URL: http://www.nuffield.ox.ac.uk/economics/papers/2005/W20/prowse_nufwp1.pdf
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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2005-W20.

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Length: 33 pages
Date of creation: 01 Aug 2005
Date of revision:
Handle: RePEc:nuf:econwp:0520

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Web page: http://www.nuff.ox.ac.uk/economics/

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Keywords: Dynamic labor supply; Heterogeneity; Multinomial choice; State dependence.;

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Cited by:
  1. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, Econjournals, vol. 4(1), pages 93-106.
  2. Prowse, Victoria L., 2010. "Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity," IZA Discussion Papers 4889, Institute for the Study of Labor (IZA).
  3. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research.
  4. Anna Kurowska & Michal Myck & Katharina Wrohlich, 2012. "Family and Labor Market Choices: Requirements to Guide Effective Evidence-Based Policy," Discussion Papers of DIW Berlin 1234, DIW Berlin, German Institute for Economic Research.
  5. Piacentini, Mario, 2008. "Migration Enclaves, Schooling Choices and Social Mobility," MPRA Paper 8376, University Library of Munich, Germany.
  6. Peter Haan & Arne Uhlendorff, 2013. "Intertemporal labor supply and involuntary unemployment," Empirical Economics, Springer, Springer, vol. 44(2), pages 661-683, April.

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