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Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity

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  • Victoria Prowse

Abstract

This paper considers the problem of determining the extent of any state dependencies in women`s labor supply behavior. Employment outcomes are modeled using a dynamic multinomial choice framework including persistent unobserved heterogeneity with a relatively general distribution. In order to ensure reliable parameter estimates, appropriate restrictions are imposed on the distribution of unobservables. Significant state dependence is present in both full-time and part-time employment. State dependencies are overestimated if persistent unobservables are ignored, and underestimated if an overly restrictive form of persistence is imposed.

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  • Victoria Prowse, 2007. "Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity," Economics Series Working Papers 337, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:337
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    Keywords

    Discrete Labor Supply; Unobserved Heterogeneity; Repeated Multinomial Choice;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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