State dependence in youth labor market experiences, and the evaluation of policy interventions |
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Authors: | Denise Doiron Tue Grgens |
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Institution: | aSchool of Economics, University of New South Wales, Sydney NSW 2052, Australia;bSPEAR Centre RSSS, Australian National University, Canberra ACT 0200, Australia |
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Abstract: | We investigate the extent and type of state dependence in labor market outcomes for young low-skilled Australians. Our model allows for three labor force states, employment, unemployment and out of the labor force, and for observed and unobserved heterogeneity. We find evidence of occurrence dependence, but no lagged duration dependence. A past employment spell increases the probability of employment in the future, but the length of the spell does not matter. A past spell of unemployment undoes the positive benefits from a spell in employment. Interpretations of these effects and implications for labor market policies are discussed. |
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Keywords: | Transition data Event history analysis State dependence Unobserved heterogeneity Policy evaluation |
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