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- Title
State dependence and unobserved heterogeneity in the employment transitions of the over-50s.
- Authors
Cappellari, Lorenzo; Dorsett, Richard; Haile, Getinet
- Abstract
This paper examines employment transitions among men and women in theUKaged between 50 and the state pension age.We use a fourth order Markov model to estimate quarterly transitions while allowing for potential endogeneity of initial conditions. The results reject exogeneity of initial conditions and show the importance of state dependence. We compare the results to those obtained with a younger sample and find evidence of a sorting process over the life-cycle whereby men's employment transitions are increasingly characterized by state dependence while, for women, unobserved heterogeneity becomes more important.We discuss some potential policy implications of the results.
- Subjects
OECD countries; UNITED Kingdom; EMPLOYMENT changes; AGE &; employment; EMPLOYMENT of men; WOMEN'S employment; RETIREMENT age; MARKOV processes; EXOGENEITY (Econometrics); HETEROGENEITY; HUMAN life cycle; ORGANISATION for Economic Co-operation &; Development; ECONOMICS
- Publication
Empirical Economics, 2010, Vol 38, Issue 3, p523
- ISSN
0377-7332
- Publication type
Article
- DOI
10.1007/s00181-009-0278-6