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Title:State dependence in a multi-state model of employment dynamics PDF Logo
Authors:Prowse, Victoria
Issue Date:2005
Series/Report no.:IZA Discussion Papers 1623
Abstract:A multinomial choice framework is used to investigate the nature of women's transitions between full-time employment, part-time employment and non-employment. The stochastic framework allows time varying and time invariant unobserved preferences, and also controls for the possible endogeneity of education, fertility and non-labor income. Significant positive true state dependence is found in both full-time and part-time employment. This finding is robust to the specification of unobserved preferences. The results are used to assess the dynamic effects of three temporary wage subsidies. All three policies have substantial effects on employment behavior for up to 6 years. However, obtaining a permanent increase in employment requires sustained or repeated interventions.
Subjects:dynamic labor supply
heterogeneity
multinomial choice
state dependence
JEL:C15
C35
J62
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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