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Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity

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Victoria Prowse

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Abstract

This paper considers the problem of determining the extent of any state dependencies in women`s labor supply behavior. Employment outcomes are modeled using a dynamic multinomial choice framework including persistent unobserved heterogeneity with a relatively general distribution. In order to ensure reliable parameter estimates, appropriate restrictions are imposed on the distribution of unobservables. Significant state dependence is present in both full-time and part-time employment. State dependencies are overestimated if persistent unobservables are ignored, and underestimated if an overly restrictive form of persistence is imposed.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 337.

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Date of creation: 2007
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Handle: RePEc:oxf:wpaper:337

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Keywords: Discrete Labor Supply Unobserved Heterogeneity Repeated Multinomial Choice

Find related papers by JEL classification:
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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