What Drives Worker Flows?

Chew Lian Chua (), Robert Dixon () and Guay C. Lim ()
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Chew Lian Chua: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper applies a multi-state latent factor intensity model to worker flows to obtain insights about the determinants of entry and exit rates pertaining to various labour market states. The analysis shows that one activity factor underpins the decision to move from employment and from unemployment and this result may be of special interest to policy makers concerned with understanding the rate of departures from the pool of both the employed and (especially) the unemployed. The paper also shows how to estimate a non-linear state space model using a Gibbs sampler that encompasses a Metropolis-Hastings algorithm as well as the auxiliary particle filter to estimate the latent process. The advantage of the approach is that it provides a parsimonious and efficient way to obtain key information about behaviour in labour markets.

New Economics Papers: this item is included in nep-lab
Date: 2007-11
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