A General Methodology to Measure Labour Market Dynamics

Davide Fiaschi and Cristina Tealdi

No 14254, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We propose a general methodology to measure labour market dynamics, inspired by the search and matching framework, based on the estimate of the transition rates between labour market states. We show how to estimate instantaneous transition rates starting from discrete time observations provided in longitudinal datasets, allowing for any number of states. We illustrate the potential of such methodology using Italian labour market data. First, we decompose the unemployment rate fluctuations into inflow and outflow driven components; then, we evaluate the impact of the implementation of a labour market reform, which substantially changed the regulations of temporary contracts.

Keywords: Markov process in continuous time; instantaneous transition rates; labour market flows; labour market forecasting; policy evaluation (search for similar items in EconPapers)
JEL-codes: C18 C53 E24 E32 J6 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2021-04
New Economics Papers: this item is included in nep-eur, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: A general methodology to measure labour market dynamics (2021)
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