Labor Market Entry and Earnings Dynamics: Bayesian Inference Using Mixtures-of-Experts Markov Chain Clustering
This paper analyzes patterns in the earnings development of young labor market entrants over their life cycle. We identify four distinctly different types of transition patterns between discrete earnings states in a large administrative data set. Further, we investigate the effects of labor market conditions at the time of entry on the probability of belonging to each transition type. To estimate our statistical model we use a model-based clustering approach. The statistical challenge in our application comes from the di±culty in extending distance-based clustering approaches to the problem of identify groups of similar time series in a panel of discrete-valued time series. We use Markov chain clustering, proposed by Pamminger and Frühwirth-Schnatter (2010), which is an approach for clustering discrete-valued time series obtained by observing a categorical variable with several states. This method is based on finite mixtures of first-order time-homogeneous Markov chain models. In order to analyze group membership we present an extension to this approach by formulating a probabilistic model for the latent group indicators within the Bayesian classification rule using a multinomial logit model.
|Date of creation:||Nov 2010|
|Contact details of provider:|| Postal: NRN Labor Economics and the Welfare State, c/o Rudolf Winter-Ebmer, Altenbergerstr. 69, 4040 Linz|
Web page: http://www.labornrn.at/
More information through EDIRC
References listed on IDEAS
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.:
- Yuji Genda & Ayako Kondo & Souichi Ohta, 2010. "Long-Term Effects of a Recession at Labor Market Entry in Japan and the United States," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
- Fraley C. & Raftery A.E., 2002. "Model-Based Clustering, Discriminant Analysis, and Density Estimation," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 611-631, June.
- Paul Oyer, 2006. "The Macro-Foundations of Microeconomics: Initial Labor Market Conditions and Long-Term Outcomes for Economists," NBER Working Papers 12157, National Bureau of Economic Research, Inc.
- Konrad Banachewicz & Aad van der Vaart & André Lucas, 2006.
"Modeling Portfolio Defaults using Hidden Markov Models with Covariates,"
Tinbergen Institute Discussion Papers
06-094/2, Tinbergen Institute.
- Konrad Banachewicz & André Lucas & Aad van der Vaart, 2008. "Modelling Portfolio Defaults Using Hidden Markov Models with Covariates," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 155-171, 03.
- Andrea Weber, 2002.
"State dependence and wage dynamics: a heterogeneous Markov chain model for wage mobility in Austria,"
10th International Conference on Panel Data, Berlin, July 5-6, 2002
D2-2, International Conferences on Panel Data.
- Weber, Andrea, 2002. "State Dependence and Wage Dynamics: A Heterogeneous Markov Chain Model for Wage Mobility in Austria," Economics Series 114, Institute for Advanced Studies.
- Fruhwirth-Schnatter, Sylvia & Kaufmann, Sylvia, 2008.
"Model-Based Clustering of Multiple Time Series,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 26, pages 78-89, January.
- Fruhwirth-Schnatter, Sylvia & Fruhwirth, Rudolf, 2007. "Auxiliary mixture sampling with applications to logistic models," Computational Statistics & Data Analysis, Elsevier, vol. 51(7), pages 3509-3528, April.
- Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
- Paul Oyer, 2006. "Initial Labor Market Conditions and Long-Term Outcomes for Economists," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 143-160, Summer.
- Kondo, Ayako, 2007. "Does the first job really matter? State dependency in employment status in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 379-402, September.
- Juarez, Miguel A. & Steel, Mark F. J., 2006. "Model-based Clustering of non-Gaussian Panel Data," MPRA Paper 880, University Library of Munich, Germany.
- JuÃ¡rez, Miguel A. & Steel, Mark F. J., 2010. "Model-Based Clustering of Non-Gaussian Panel Data Based on Skew-t Distributions," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(1), pages 52-66.
- Illoong Kwon & Eva Meyersson Milgrom, 2007. "Cohort Effects in Wages and Promotions," Discussion Papers 07-025, Stanford Institute for Economic Policy Research.
- Jeffrey M Wooldridge, 2002.
"Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity,"
CeMMAP working papers
CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
- Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009.
"Austrian Social Security Database,"
NRN working papers
2009-03, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- Oddbjørn Raaum & Knut Røed, 2006. "Do Business Cycle Conditions at the Time of Labor Market Entry Affect Future Employment Prospects?," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 193-210, May.
- Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2006.
"The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates,"
NBER Working Papers
12159, National Bureau of Economic Research, Inc.
- Oreopoulos, Philip & Wachter, Till von & Heisz, Andrew, 2008. "The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates," IZA Discussion Papers 3578, Institute for the Study of Labor (IZA).
- Burgess, Simon & Propper, Carol & Rees, Hedley & Shearer, Arran, 2003. "The class of 1981: the effects of early career unemployment on subsequent unemployment experiences," Labour Economics, Elsevier, vol. 10(3), pages 291-309, June.
When requesting a correction, please mention this item's handle: RePEc:jku:nrnwps:2010_14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (René Böheim)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.