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Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity

  • Victoria Prowse

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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File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper337.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 337.

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Date of creation: 01 Aug 2007
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Handle: RePEc:oxf:wpaper:337
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