Handbook of Labor Economics, Volume 4A & B Set
Orley Ashenfelter, David Card
Format: PDF / Kindle (mobi) / ePub
What factors affect the ways individuals participate in labor markets?
"New Developments and Research on Labor Markets" (volume 4B) proposes answers to this and other questions on important topics of public policy. Leading labor economists demonstrate how better data and advanced experiments help them apply economic theory, yielding sharper analyses and conclusions. The combinations of these improved empirical findings with new models enable the authors of these chapters to reveal how labor economists are developing new and innovative ways to measure key parameters and test important hypotheses.
* Concentrates on empirical research in specific labor markets, including those defined by age, gender, and race
* Reveals how questions and answers about these markets have changed and how models measure them
* Documents how conceptual models and empirical work explain important practical issues
the autocovariances from (24) from the one estimated from PSID data. The key problem with this is that the usual panel data that is available either follows individuals for a limited number of time periods, or suffers from severe attrition, which is probably not random, introducing biases. Thus, in practice it is very difficult to identify the nature of the income process without some prior assumptions and without combining information with another process, such as consumption or labor supply.
US inequality over the 1980s and 1990s. Their permanent component is defined to be a random walk with a time varying variance. The transitory component is an AR(1), also with time varying variance. Both variances were shown to increase over time. They also consider a variety of other models including most importantly the random growth model, where age is interacted with a fixed effect. As we have already explained, this is an important alternative to the random walk model because they both
permanent and transitory income shocks are drawn. Indeed this idea of heterogeneity was taken up by Browning et al. (2006) who estimate an income process with almost all aspects being individual-specific. They conclude that the nature of the income process varies 815 816 Costas Meghir and Luigi Pistaferri across individuals, with some being best characterized by a unit root in the process, while others by a stationary one. Clearly the presence of a random walk in earnings is controversial
current jobs. Wage observations below $1 per hour or above $115 per hour are eliminated from the data. The dependent variable in columns 5 through 8 is a binary variable indicating whether the individual is unemployed. The unemployment variable is taken from the individual’s reported employment status in the raw data. In both sets of regressions, the sample consists of the NLSY79 cross-section sample plus the supplemental samples of blacks and Hispanics. Respondents who did not take the ASVAB
(unless liquidity constraints are important—which may well be the case for younger consumers).13 Note finally that if the permanent component were literally permanent ( pi,a,t = pi ), it would affect the level of consumption but not its change (unless consumers were learning about pi , see Guvenen, 2007). In the classical version of the LC-PIH the size of income changes does not matter. One reason why the size of income changes may matter is because of adjustment costs: 12 See Friedman (1957).