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Correcting Measurement Errors in Transition Models Based on Retrospective Panel Data

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  • Shaimaa Yassin
  • Francois Langot

Abstract

We propose in this paper a dynamic n-state transition model to correct for measurement error, that could arise for example from recall and/or design bias, in retrospective panels. Our model allows the correction of measurement errors, when very little auxiliary information is available, over a long period of time taking into consideration the conjuncture fluctuations. The technique suggested shows that it is sufficient to have population moments (for at least one point in time) to correct over- or under-reporting biases. Using a Simulated Method of Moments, one can estimate a transition- and time-specific correction matrix for the labor market flows in a biased retrospective panel. Using retrospective and contemporaneous data from Egypt, we estimate the model and show the significance and robustness of our correction. We show through a reform evaluation that neglecting measurement error in the data would have produced significantly different and misleading results.

Suggested Citation

  • Shaimaa Yassin & Francois Langot, 2017. "Correcting Measurement Errors in Transition Models Based on Retrospective Panel Data," IRENE Working Papers 17-04, IRENE Institute of Economic Research.
    • Handle: RePEc:irn:wpaper:17-04
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    References listed on IDEAS

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    1. Duffie, Darrell & Singleton, Kenneth J, 1993. "Simulated Moments Estimation of Markov Models of Asset Prices," Econometrica, Econometric Society, vol. 61(4), pages 929-952, July.
    2. Ulrich Rendtel & Rolf Langeheine & Roland Berntsen, 1998. "The Estimation Of Poverty Dynamics Using Different Measurements Of Household Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 81-98, March.
    3. François Langot & Shaimaa Yassin, 2015. "Reforming Employment Protection in Egypt: An Evaluation Based on Transition Models with Measurement Errors," Working Papers 918, Economic Research Forum, revised Jun 2015.
    4. Ragui Assaad & Caroline Krafft & Shaimaa Yassin, 2018. "Comparing retrospective and panel data collection methods to assess labor market dynamics," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-34, December.
    5. Ragui Assaad & Caroline Krafft, 2013. "The Egypt labor market panel survey: introducing the 2012 round," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-30, December.
    6. Shaimaa Yassin, 2014. "Job Accession, Separation and Mobility in the Egyptian Labor Market Over the Past Decade," Working Papers 881, Economic Research Forum, revised Nov 2014.
    7. Thierry Magnac & Michael Visser, 1999. "Transition Models With Measurement Errors," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 466-474, August.
    8. Poterba, James M & Summers, Lawrence H, 1986. "Reporting Errors and Labor Market Dynamics," Econometrica, Econometric Society, vol. 54(6), pages 1319-1338, November.
    9. Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
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    Cited by:

    1. Ragui Assaad & Caroline Krafft & Shaimaa Yassin, 2018. "Comparing retrospective and panel data collection methods to assess labor market dynamics," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-34, December.
    2. Ragui Assaad & Caroline Krafft & Shaimaa Yassin, 2020. "Job creation or labor absorption? An analysis of private sector job growth in Egypt," Middle East Development Journal, Taylor & Francis Journals, vol. 12(2), pages 177-207, July.

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    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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