Modeling Employment Dynamics With State Dependence and Unobserved Heterogeneity

Abstract

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Time Aggregation and State Dependence in Welfare Receipt

“…By dropping individuals after 10 years, we however avoid that earlier cohorts are observed for a longer period and thus at higher ages than the following cohorts. In constructing our weakly balanced panel we follow an approach used by Prowse (2012).…”

“…More recent studies analyse transitions between multiple labour market states using dynamic multinomial-choice models (Uhlendorff, 2006;Prowse, 2012). 1 of the evidence on state dependence in welfare benefit receipt is based on annual data that come either from administrative sources (see Hansen & Lofstrom (2008 or Andrén & Andrén (2013) for Sweden) or from household survey data (Cappellari & Jenkins (2009) for Britain, Riphahn & Wunder (2013), Wunder & Riphahn (2014) and Königs (2014) for Germany, and Hansen, Lofstrom, Liu & Zhang (2014) for Canada).…”

The dynamics of solo self-employment: Persistence and transition to employership

“…Such knowledge is important for policy makers aiming at stimulating job creation. In general, the literature distinguishes between two mechanisms that may explain individuals' transitions between labor market states, both of which have different policy implications (see, e.g., Prowse 2012). First, if the past experience of solo self-employment has a causal effect on the probability of solo self-employment in the future, then policy measures such as start-up subsidies will have lasting effects even after the subsidies ended.…”

A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation

“…This could arise if the employment history is relevant for prices, preferences and constraints of future periods (Prowse, 2007). In this sense, state dependence has a relatively broad definition and captures a variety of different effects, ranging from intertemporal nonseparable preferences, human capital accumulation, signaling and scarring effects, to effects of fixed costs or search costs.…”