Comparative Analysis of Labor Market Dynamics Using Markov Processes: An Application to Informality

Mariano Bosch and William Maloney

No 3038, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper discusses a set of statistics for examining and comparing labor market dynamics based on the estimation of continuous time Markov transition processes. It then uses these to establish stylized facts about dynamic patterns of movement using panel data from Argentina, Brazil and Mexico. The estimates suggest broad commonalities among the three countries, and establish numerous common patterns of worker mobility among sectors of work and inactivity. As such, we offer some of the first comparative work on labor dynamics. The paper then particularly focuses on the role of the informal sector, both for its intrinsic interest, and as a case study illustrating the strengths and limits of the tools. The results suggest that a substantial part of the informal sector, particularly the self-employed, corresponds to voluntary entry although informal salaried work may correspond more closely to the standard queuing view, especially for younger workers.

Keywords: Markov processes; labor market dynamics; Informality (search for similar items in EconPapers)
JEL-codes: C14 J21 J24 J64 O17 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2007-09
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67)

Published - published in: Labour Economics, 2010, 17 (4), 621-631

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Related works:
Journal Article: Comparative analysis of labor market dynamics using Markov processes: An application to informality (2010)
Working Paper: Comparative analysis of labor market dynamics using markov processes: an application to informality (2007)
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