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Dynamic Labor Force Participation Decisions of Males in the Presence of Layoffs and Uncertain Job Offers


  • Füsun Gönül


This paper presents a utility maximization model of workers who make decisions to work or not over a lifetime. The objective is to maximize the presented discounted value of utility arising from the participation decisions. In addition to duration dependence introduced through time-variant job offer and layoff probabilities, state dependence enters the model by the existence of a different risk while working, namely, the dismissal risk, than the one while not working, namely, the possibility of no job offers. A dynamic programming algorithm is solved and estimated within a maximum likelihood routine, with data from the National Longitudinal Surveys youth cohort.

Suggested Citation

  • Füsun Gönül, 1989. "Dynamic Labor Force Participation Decisions of Males in the Presence of Layoffs and Uncertain Job Offers," Journal of Human Resources, University of Wisconsin Press, vol. 24(2), pages 195-220.
  • Handle: RePEc:uwp:jhriss:v:24:y:1989:i:2:p:195-220

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