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Earnings Capacity and Labour Market Participation

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  • van Soest, A.H.O.

    (Tilburg University, Center For Economic Research)

  • Fontein, P.F.

    (Tilburg University, Center For Economic Research)

  • Euwals, R.W.

Abstract

We analyze models for individuals' labour market state.We distinguish between full-time and part-time work, but also between various types of economic inactivity, i.e. unemployment, disability, early retirement and working in the household.We consider the impact on the state probabilities of individual attributes, with emphasis on earnings capacity.We take account of the problem that only earnings of workers are observed, and of the potential endogeneity of earnings.We generalize the multinomial logit model, allowing for unobserved heterogeneity.Moreover, we allow for non-linearities due to, for example, minimum wages.Using micro-data from the Dutch Socio-Economic Panel, we look at static models and compare results for various years.Finally, we also look at dynamic models, in which the transition probabilities from employment into various inactivity states are modelled, conditional on job characteristics.

Suggested Citation

  • van Soest, A.H.O. & Fontein, P.F. & Euwals, R.W., 1996. "Earnings Capacity and Labour Market Participation," Discussion Paper 1996-57, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:215e9f66-5c73-41ee-be7d-da5f3d7c515c
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    References listed on IDEAS

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    1. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
    2. van Schaik, A.B.T.M., 1992. "Productivity, labour force participation and the Solow growth model," Research Memorandum FEW 539, Tilburg University, School of Economics and Management.
    3. Meyer, Robert H & Wise, David A, 1983. "The Effects of the Minimum Wage on the Employment and Earnings of Youth," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 66-100, January.
    4. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    5. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 5-33, September.
    6. Stern, Steven, 1996. "Semiparametric estimates of the supply and demand effects of disability on labor force participation," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 49-70.
    7. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 3-39, June.
    8. Lung-Fei Lee, 1982. "Some Approaches to the Correction of Selectivity Bias," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 355-372.
    9. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-262, March.
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    Cited by:

    1. Boockmann, Bernhard, 2002. "Mixed motives: an empirical analysis of ILO roll-call votes," ZEW Discussion Papers 02-40, ZEW - Leibniz Centre for European Economic Research.
    2. Paul Frijters & Bas van der Klaauw, 2006. "Job Search with Nonparticipation," Economic Journal, Royal Economic Society, vol. 116(508), pages 45-83, January.
    3. Bernhard Boockmann, 2003. "Mixed Motives: An Empirical Analysis of ILO Roll-Call Voting," Constitutional Political Economy, Springer, vol. 14(4), pages 263-285, December.

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    Keywords

    labour participation; incomes; labour models;

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