Labour Market Dynamics in EU: a Bayesian Markov Chain Approach

George A. Christodoulakis () and Emmanuel C. Mamatzakis ()

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: This paper focuses on labour market dynamics in the EU 15 using Markov Chains for proportions of aggregate data for the first time in this literature. We apply a Bayesian approach, which employs a Monte Carlo Integration procedure that uncovers the entire empirical posterior distribution of transition probabilities from full employment to part employment, temporary employment and unemployment and vice a versa. Thus, statistical inferences are readily available. Our results show that there are substantial variations in the transition probabilities across countries, implying that the convergence of the EU-15 labour markets is far from completed. However, some common patterns are observed as countries with flexible labour markets exhibit similar transition probabilities between different states of the labour market.

Keywords: Employment; Unemployment; Markov Chains. (search for similar items in EconPapers)
JEL-codes: C53 E24 E27 E37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm, nep-eec, nep-lab and nep-ore
Date: 2009-04, Revised 2009-04
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Persistent link: http://EconPapers.repec.org/RePEc:mcd:mcddps:2009_07

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