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State Dependence in a Multi-state Model of Employment

A multinomial choice framework is used to investigate the nature of women's transitions between full-time employment, part-time employment and non-employment. The stochastic framework allows time varying and time invariant unobserved preferences, and also controls for the possible endogenity of education, fertility and non-labor income. Significant positive true state dependence is found in both full-time and part-time employment. This finding is robust to the specification of unobserved preferences. The results are used the assess the dynamic effects of three temporary wage subsidies. All three policies have substantial effects on employment behavior for up to 6 years. However, obtaining a permanent increase in employment requires sustained or repeated interventions.

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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2005-W20.

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Length: 33 pages
Date of creation: 01 Aug 2005
Date of revision:
Handle: RePEc:nuf:econwp:0520
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  8. Hajivassiliou, Vassilis A & Ruud, Paul A., 1993. "Classical Estimation Methods for LDV Models Using Simulation," Department of Economics, Working Paper Series qt3cg196fr, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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  11. Stephen Knights & Mark Harris & Joanne Loundes, 2000. "Dynamic Relationships in the Australian Labour Market: Heterogeneity and State Dependence," Melbourne Institute Working Paper Series wp2000n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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