Unemployment Benefits, Labor Market Transitions, and Spurious Flows: A Multinational Logit Model with Errors in Classification
This paper develops an algorithm for analyzing discrete events, such as labor market transitions, when some of these transitions are spurious because of measurement errors. Our algorithm extends the standard multinomial logit model, although our basic approach could be used with other stochastic models as well. We apply this algorithm to study the effect of unemployment insurance (UI) on transitions from unemployment to employment and out of the labor force. Our results suggest that VI lengthens unemployment spells by reducing both transition rates, and show that correcting for measurement error strengthens the apparent effect of VI on spell durations.
|Date of creation:||Aug 1993|
|Date of revision:|
|Publication status:||published as Review of Economics & Statistics, vol. LXXVII, no. 2, pp. 207-216, (May 1995).|
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- Christopher J. Flinn & James J. Heckman, 1982.
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NBER Working Papers
0979, National Bureau of Economic Research, Inc.
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- John Bound & Charles Brown & Greg J. Duncan & Willard L Rodgers, 1989. "Measurement Error In Cross-Sectional and Longitudinal Labor Market Surveys: Results From Two Validation Studies," NBER Working Papers 2884, National Bureau of Economic Research, Inc.
- Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 508-32, October.
- Feldstein, Martin & Poterba, James, 1984.
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- Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
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