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Title: Job Search and Labor Force Participation in Equilibrium: Theory and Estimation
Resulting in 1 citation.
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Yip, Chun Seng |
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Job Search and Labor Force Participation in Equilibrium: Theory and Estimation Working Paper, Department of Economics, University of Pennsylvania, November 2003. Also: http://www.econ.upenn.edu/~yipcs/talkjan04.pdf Cohort(s): NLSY79 Publisher: Department of Economics, University of Pennsylvania Keyword(s): Job Search; Labor Force Participation; Modeling; Quits Permission to reprint the abstract has not been received from the publisher. Recent empirical evidence suggests that an increasing number of working-age individuals have a weaker attachment to the labor force. Therefore when studying job search in frictional labor markets, it is increasingly important to model workers' participation and quit decisions as well. I develop an equilibrium model where workers determine participation/exit decisions as well as their job quit/acceptance rules. Unlike previous models, all transitions are the result of optimal decisions. The key features of the model are that being unemployed (U) entails a search cost compared to being out of the labor force (OLF), and workers face occasional shocks to their non-work alternatives, causing them to revise their labor market entry/exit and job accept/quit decisions. The model is structurally estimated using data on young women from the NLSY79. Despite data limitations arising from crucial unobserved market-entry and exit transitions, I am able to estimate the model. This is accomplished by modifying the likelihood contributions through the use of Bessel functions. The model estimates the magnitude of these hidden transitions. The model is used to assess and compare the effects of labor market policies targeted at the unemployed, with policies towards both unemployed and OLF. These policy simulations provide richer implications not possible with a model without endogenous participation. |
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Bibliography Citation
Yip, Chun Seng. "Job Search and Labor Force Participation in Equilibrium: Theory and Estimation." Working Paper, Department of Economics, University of Pennsylvania, November 2003. |