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State Dependence in a Multi-state Model of Employment Dynamics

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  • Victoria Prowse

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 employment. This finding is robust to the specification of unobserved preferences. The results are used to 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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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2005-W20.

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Date of creation: 01 Sep 2005
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Handle: RePEc:oxf:wpaper:2005-w20

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

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Cited by:
  1. Prowse, Victoria, 2012. "Modeling employment dynamics with state dependence and unobserved heterogeneity," MPRA Paper 38038, University Library of Munich, Germany, revised 10 Apr 2012.
  2. Arne Uhlendorff, 2006. "From No Pay to Low Pay and Back Again?: A Multi-State Model of Low Pay Dynamics," Discussion Papers of DIW Berlin 648, DIW Berlin, German Institute for Economic Research.
  3. Peter Haan, 2006. "Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin," JEPS Working Papers, JEPS 06-002, JEPS.
  4. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity: Labour Market Performance in Denmark," CESifo Economic Studies, CESifo, CESifo, vol. 53(3), pages 389-429, September.
  5. Peter Haan, 2005. "State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin," Discussion Papers of DIW Berlin 538, DIW Berlin, German Institute for Economic Research.
  6. Nisar Ahmad & Rayhaneh Esmaeilzadeh & J?rgen Hansen, 2014. "Immigrant-Native Differences in Earnings Mobility Processes," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 13-32, Feburary.

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