Labor force participation and the discouraged worker effect
AbstractThis paper analyzes labor force participation with particular reference to the discouraged worker effect. Discouraged workers are those who do not search for work because they view their chances of finding a suitable job as too low. The theoretical point of departure is a search model where the worker evaluates the expected utility of searching for work and decides to participate in the labor market if the expected utility of the search exceeds the utility of not working. From this framework we derive an empirical model for the probability that the worker will be unemployed or employed as a function of the probability of getting an acceptable job, given that the worker searches for work. The model is estimated on a sample of married and cohabitating women in Norway covering the period from 1988 to 2008. The results show that the discouraged worker effect is substantial. On average, about one third of those who are out of the labor force are discouraged according to our analysis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 642.
Date of creation: Dec 2010
Date of revision:
Discouraged workers; Labor force participation; Random utility modeling;
Other versions of this item:
- John Dagsvik & Tom Kornstad & Terje Skjerpen, 2013. "Labor force participation and the discouraged worker effect," Empirical Economics, Springer, vol. 45(1), pages 401-433, August.
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-LAB-2010-12-18 (Labour Economics)
- NEP-MIC-2010-12-18 (Microeconomics)
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.:
- John K. Dagsvik & Tom Kornstad & Terje Skjerpen, 2006. "Analysis of the discouraged worker phenomenon. Evidence from micro data," Discussion Papers 453, Research Department of Statistics Norway.
- Blundell, Richard William & Ham, John & Meghir, Costas, 1987.
"Unemployment and Female Labour Supply,"
CEPR Discussion Papers
149, C.E.P.R. Discussion Papers.
- Flinn, C. & Heckman, J., 1982.
"New methods for analyzing structural models of labor force dynamics,"
Journal of Econometrics,
Elsevier, vol. 18(1), pages 115-168, January.
- James J. Heckman & Christopher J. Flinn, 1982. "New Methods for Analyzing Structural Models of Labor Force Dynamics," NBER Working Papers 0856, National Bureau of Economic Research, Inc.
- Benati, Luca, 2001. "Some empirical evidence on the 'discouraged worker' effect," Economics Letters, Elsevier, vol. 70(3), pages 387-395, March.
- Vendrik Maarten & Cörvers Frank, 2009.
"Male and female labour force participation: the role of dynamic adjustments to changes in labour demand, government policies and autonomous trends,"
ROA Research Memorandum
013, Maastricht University, Research Centre for Education and the Labour Market (ROA).
- Vendrik, Maarten & Cörvers, Frank, 2009. "Male and Female Labour Force Participation: The Role of Dynamic Adjustments to Changes in Labour Demand, Government Policies and Autonomous Trends," IZA Discussion Papers 4397, Institute for the Study of Labor (IZA).
- Vendrik Maarten & Cörvers Frank, 2009. "Male and female labour force participation: the role of dynamic adjustments to changes in labour demand, government policies and autonomous trends," Research Memoranda 036, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
- Sara Connolly, 1997. "A model of female labour supply in which supply is dependent upon the chances of finding a job," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1379-1386.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Jovanovic, Boyan, 1979.
"Job Matching and the Theory of Turnover,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages 972-90, October.
- Bolduc, Denis & Khalaf, Lynda & Yélou, Clément, 2010. "Identification robust confidence set methods for inference on parameter ratios with application to discrete choice models," Journal of Econometrics, Elsevier, vol. 157(2), pages 317-327, August.
- Bloemen, Hans G., 2003.
"Job search, search intensity and labour market transitions : an empirical analysis,"
Serie Research Memoranda
0026, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Hans G. Bloemen, 2005. "Job Search, Search Intensity, and Labor Market Transitions: An Empirical Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
- Bloemen, Hans G., 2001. "Job search, search intensity and labour market transitions : an empirical analysis," Serie Research Memoranda 0037, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Arne Risa Hole, 2007.
"A comparison of approaches to estimating confidence intervals for willingness to pay measures,"
John Wiley & Sons, Ltd., vol. 16(8), pages 827-840.
- Arne Risa Hole, 2006. "A comparison of approaches to estimating confidence intervals for willingness to pay measures," Working Papers 008cherp, Centre for Health Economics, University of York.
- Blundell, Richard & Ham, John & Meghir, Costas, 1998. "Unemployment, discouraged workers and female labour supply," Research in Economics, Elsevier, vol. 52(2), pages 103-131, June.
- Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-68, September.
- Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey: Part I," Economic Inquiry, Western Economic Association International, vol. 14(2), pages 155-89, June.
- Dagsvik, John K. & Strøm, Steinar, 2004.
"Sectoral labor supply, choice restrictions and functional form,"
13/2004, Oslo University, Department of Economics.
- Steinar Str�m & John K. Dagsvik, 2006. "Sectoral labour supply, choice restrictions and functional form," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 803-826.
- John K. Dagsvik & Steinar Strøm, 2004. "Sectoral Labor Supply, Choice Restrictions and Functional Form," Discussion Papers 388, Research Department of Statistics Norway.
- Krinsky, Itzhak & Robb, A Leslie, 1990. "On Approximating the Statistical Properties of Elasticities: A Correction," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 189-90, February.
- Darby, Julia & Hart, Robert A. & Vecchi, Michela, 2001. "Labour force participation and the business cycle: a comparative analysis of France, Japan, Sweden and the United States," Japan and the World Economy, Elsevier, vol. 13(2), pages 113-133, April.
- Cem Baslevent & Ozlem Onaran, 2003. "Are Married Women in Turkey More Likely to Become Added or Discouraged Workers?," LABOUR, CEIS, vol. 17(3), pages 439-458, 09.
- Emerson, Jamie, 2011. "Unemployment and labor force participation in the United States," Economics Letters, Elsevier, vol. 111(3), pages 203-206, June.
- Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-19, November.
- Tom Kornstad & Ragnar Nymoen & Terje Skjerpen, 2012.
"Macroeconomic shocks and the probability of being employed,"
675, Research Department of Statistics Norway.
- Kornstad, Tom & Nymoen, Ragnar & Skjerpen, Terje, 2012. "Macroeconomic Shocks and the Probability of Being Employed," Memorandum 03/2012, Oslo University, Department of Economics.
- Majumder, Rajarshi, 2011. "Female labour supply in india: proximate determinants," MPRA Paper 43250, University Library of Munich, Germany, revised Oct 2012.
- Pål Boug & Ådne Cappelen & Torbjørn Eika, 2013. "The importance of the distribution sector for exchange rate pass-through in a small open economy. A large scale macroeconometric modelling approach," Discussion Papers 731, Research Department of Statistics Norway.
- Giorgio Di Pietro & Toni Mora, 2011. "The effect of the l’Aquila earthquake on labour market outcomes," Working Papers 2011/41, Institut d'Economia de Barcelona (IEB).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard).
If references are entirely missing, you can add them using this form.