Evolving Labor Market Transition Probabilities and Their Impact on Worklife Estimates

Matthew J. Cushing; David I. Rosenbaum

doi:10.5085/jfe.25.1.25

Article Contents

Abstract
I. Introduction
II. The CPS Data
III. Merging IPUMS-CPS Data with Raw CPS Data
IV. Matching CPS Entries across Years
V. Estimating Transition Probabilities
VI. Comparing Transition Probabilities
VII. Impacts on Worklives
VIII. Conclusion
References
Appendix

Editorial Type:

Article Category: Research Article

Online Publication Date: 01 Apr 2014

Evolving Labor Market Transition Probabilities and Their Impact on Worklife Estimates

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Page Range: 25 – 50

DOI: 10.5085/jfe.25.1.25

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Abstract

A panel of age-specific transition probabilities is developed for the three-decade period 1980 to 2010. Analysis shows that both male and female transition probabilities have evolved over the 30-year span. The transition probabilities are used to calculate both period and cohort worklives. The results differ starkly for men and women. For men, worklives are most affected for those with little education. For women, obtaining a college degree has the most impact on worklives. The results suggest that using historical period worklives may have mis-estimated worklives for these two groups relative to cohort estimates.

Figure 1.

Male Probability of Remaining Active (^ap_x^a): Comparing 1980–1985 and 2005–2010 Samples

Figure 2.

Male Probability of Remaining Inactive (ⁱp_xⁱ): Comparing 1980–1985 and 2005–2010 Samples

Figure 3.

Female Probability of Remaining Active (^ap_x^a): Comparing 1980–1985 Sample and 2006–2010 Sample

Figure 4.

Female Annual Transition Probabilities (ⁱp_xⁱ): Comparing 1980–1985 Sample and 2005–2010 Sample

Contributor Notes

*Matthew J. Cushing, Professor of Economics, University of Nebraska-Lincoln; David I. Rosenbaum, Professor of Economics, University of Nebraska-Lincoln.