Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity

Victoria Prowse

No 4889, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper extends existing work on labor force participation dynamics by distinguishing between full-time and part-time employment and allowing unobserved heterogeneity in the effects of previous employment outcomes, children and education on employment dynamics. The results reveal significant autocorrelation in unobservables, and significant variation in the effects of children and education on labor supply preferences. Moreover, omission of random coeffcients or autocorrelation can bias significantly estimates of policy effects. On average, policies temporarily incentivizing part-time and full-time employment are equally effective tools for reducing non-employment. However, non-employment among women with young children is more responsive to policies encouraging part-time rather than full-time work.

Keywords: state dependence; discrete labor supply; unobserved heterogeneity; repeated multinomial choice (search for similar items in EconPapers)
JEL-codes: C15 C25 J22 J6 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-04
New Economics Papers: this item is included in nep-dcm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of Business and Economic Statistics, 2012, 30 (2), 411-431

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https://docs.iza.org/dp4889.pdf (application/pdf)

Related works:
Journal Article: Modeling Employment Dynamics With State Dependence and Unobserved Heterogeneity (2012)
Working Paper: Modeling employment dynamics with state dependence and unobserved heterogeneity (2012)
Working Paper: Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity (2007)
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