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Title: Models for the Analysis of Labor Force Dynamics
Resulting in 1 citation.
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Flinn, Christopher Jay Heckman, James J. |
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Models for the Analysis of Labor Force Dynamics In: Advances in Econometrics 1. R. Basemann and G. Rhodes, eds., Greenwich, CT: JAI Press, 1982 Cohort(s): Young Men Publisher: JAI Press, Inc. Keyword(s): Behavioral Differences; Heterogeneity; Job Search; Job Turnover; Labor Force Participation; Labor Turnover; Markov chain / Markov model; Work Histories This article presents new econometric methods for the empirical analysis of individual labor market histories. The techniques developed here extend previous work on continuous time models in four ways: (1) a structural economic interpretation of these models is presented; (2) time varying explanatory variables are introduced into the analysis in a general way; (3) unobserved heterogeneity components are permitted to be correlated across spells; and (4) a flexible model of duration dependence is presented that accommodates many previous models as a special case and that permits tests among competing specifications within a unified framework. In addition, longer range types of state dependence can be introduced into the model and their empirical importance tested. Two sets of empirical results are presented. The first set is an analysis of employment and nonemployment data using both regression and maximum likelihood procedures. Standard regression methods are shown to perform rather poorly and to produce estimates wildly at variance with the estimates from our maximum likelihood procedure. The maximum likelihood estimates are more in accord with a priori theoretical notions. A major conclusion of this analysis is that the discrete time Markov model widely used in labor market analysis is inconsistent with the data. The second set of empirical results is a test of the hypothesis that "unemployment" and "out of the labor force" are behaviorally different labor market states. Contrary to recent claims, the authors find that they are separate states for the sample of young men utilized. |
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Bibliography Citation
Flinn, Christopher Jay and James J. Heckman. "Models for the Analysis of Labor Force Dynamics" In: Advances in Econometrics 1. R. Basemann and G. Rhodes, eds., Greenwich, CT: JAI Press, 1982
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