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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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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper337.pdf
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    1. Hiroshi Teruyama & Hiroyuki Toda, 2017. "Polarization and Persistence in the Japanese Labor Market," KIER Working Papers 957, Kyoto University, Institute of Economic Research.
    2. Lixin Cai, 2015. "The dynamics of low pay employment in Australia," International Journal of Manpower, Emerald Group Publishing, vol. 36(7), pages 1095-1123, October.
    3. Lechmann, Daniel S. J. & Wunder, Christoph, 2016. "The dynamics of solo self-employment: Persistence and transition to employership," Discussion Papers 98, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    4. Mario Bossler & Alexander Mosthaf & Thorsten Schank, 2016. "More Female Manager Hires through More Female Managers? Evidence from Germany," Working Papers 1618, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    5. repec:wly:econjl:v:127:y:2017:i:604:p:1833-1873 is not listed on IDEAS
    6. Taehyun Ahn, 2010. "Employment Dynamics of Married Women and the Role of Part-Time Work: Evidence from Korea," Working Papers 1003, Research Institute for Market Economy, Sogang University.
    7. Nolte, Andre & Gürtzgen, Nicole, 2015. "Changing Fortunes during Economic Transition - Low-Wage Persistence before and after German Unification," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112828, Verein für Socialpolitik / German Economic Association.
    8. Peter Haan & Daniel Kemptner & Arne Uhlendorff, 2015. "Bayesian procedures as a numerical tool for the estimation of an intertemporal discrete choice model," Empirical Economics, Springer, vol. 49(3), pages 1123-1141, November.
    9. Regina T. Riphahn & Christoph Wunder, 2016. "State dependence in welfare receipt: transitions before and after a reform," Empirical Economics, Springer, vol. 50(4), pages 1303-1329, June.
    10. Wunder, Christoph & Riphahn, Regina, 2013. "Welfare transitions before and after reforms of the German welfare system," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79715, Verein für Socialpolitik / German Economic Association.
    11. Manudeep Bhuller & Christian N. Brinch & Sebastian Königs, 2017. "Time Aggregation and State Dependence in Welfare Receipt," Economic Journal, Royal Economic Society, vol. 127(604), pages 1833-1873, September.
    12. Yi, DongGyu, 2014. "Three studies on environmental valuation," ISU General Staff Papers 201401010800005065, Iowa State University, Department of Economics.
    13. Ahn, Taehyun, 2012. "Employment Dynamics of Married Women and the Role of Part-time Work: the Case of Korea," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 53(1), pages 25-38, June.
    14. Daniel S.J. Lechmann & Christoph Wunder, 2017. "The Dynamics of Solo Self-Employment: Persistence and Transition to Employership," SOEPpapers on Multidisciplinary Panel Data Research 932, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Michelle van der Merwe, 2016. "Factors Affecting an Individual's Future Labour Market Status," RBA Bulletin, Reserve Bank of Australia, pages 11-22, December.
    16. Umut Oguzoglu, 2016. "Disability and Multi-State Labour Force Choices with State Dependence," The Economic Record, The Economic Society of Australia, vol. 92(296), pages 28-46, March.
    17. K. Sudhir & Nathan Yang, 2014. "Exploiting the Choice-Consumption Mismatch: A New Approach to Disentangle State Dependence and Heterogeneity," Cowles Foundation Discussion Papers 1941, Cowles Foundation for Research in Economics, Yale University.
    18. Haan, Peter, 2010. "A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation," Labour Economics, Elsevier, vol. 17(2), pages 323-335, April.
    19. Zhiyang Jia & Trine E. Vattø, 2016. "The path of labor supply adjustment. Sources of lagged responses to tax-benefit reforms," Discussion Papers 854, Statistics Norway, Research Department.

    More about this item

    Keywords

    Discrete Labor Supply; Unobserved Heterogeneity; Repeated Multinomial Choice;

    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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