Dynamic Labor Force Participation Decisions of Males in the Presence of Layoffs and Uncertain Job Offers

Füsun Gönül

Journal of Human Resources, 1989, vol. 24, issue 2, 195-220

Abstract: This paper presents a utility maximization model of workers who make decisions to work or not over a lifetime. The objective is to maximize the presented discounted value of utility arising from the participation decisions. In addition to duration dependence introduced through time-variant job offer and layoff probabilities, state dependence enters the model by the existence of a different risk while working, namely, the dismissal risk, than the one while not working, namely, the possibility of no job offers. A dynamic programming algorithm is solved and estimated within a maximum likelihood routine, with data from the National Longitudinal Surveys youth cohort.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:24:y:1989:i:2:p:195-220

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