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Modeling employment dynamics with state dependence and unobserved heterogeneity

Victoria Prowse

MPRA Paper from University Library of Munich, Germany

Abstract: We extend existing work on the dynamics of labor force participation by distinguishing between full-time and part-time employment and by allowing unobserved heterogeneity in the effects of previous employment outcomes, children and education on labor supply behavior. In addition, unobserved heterogeneity may feature autocorrelation and correlated random effects. Our results reveal significant variation in the effects of children and education on labor supply behavior. Moreover, the omission of random coefficients and autocorrelation biases estimates of state dependencies. On average, temporary shocks that increase the rate of part-time employment lead subsequently to lower rates of non-employment than do shocks that temporarily increase the rate of full-time work.

Keywords: Discrete Labor Supply; Repeated Multinomial Choice; Maximum Simulated Likelihood Estimation (search for similar items in EconPapers)
JEL-codes: C33 C52 J22 (search for similar items in EconPapers)
Date: 2012-04-10, Revised 2012-04-10
New Economics Papers: this item is included in nep-dcm and nep-lab
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Related works:
Journal Article: Modeling Employment Dynamics With State Dependence and Unobserved Heterogeneity (2012) Downloads
Working Paper: Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity (2010) Downloads
Working Paper: Modeling Employment Dynamics with State Dependence and Unobserved Heterogeneity (2007) Downloads
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