Working Paper: CEPR ID: DP302
Authors: John F. Ermisch; Robert E. Wright
Abstract: We adopt a stochastic model of labor market turnover in order to analyze entries to and exits from paid employment by British lone mothers. We estimate the model using demographic and employment history data from the 1980 Women and Employment Survey. The theoretical model predicts that the exit rate falls and entry rises with a higher woman's human capital wage, and that a higher utility flow received when out of employment has the opposite effects. These predictions are generally confirmed by the parameter estimates, although welfare benefits received when not employed are only found to discourage employment in a restricted model that is rejected by the data.
Keywords: lone parent; labour market turnover; employment
JEL Codes: 824; 910
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher human capital wage (J24) | increase rate of entry into employment (J68) |
| higher human capital wage (J24) | decrease exit rate from full-time employment (J63) |
| age of youngest child (J13) | increase likelihood of entering full-time employment (J68) |
| multiple children (J13) | decrease likelihood of entering full-time employment (J29) |
| higher utility flow from being out of employment (J68) | raise reservation wage (J38) |
| higher reservation wage (J31) | increase exit rate from employment (J63) |
| higher reservation wage (J31) | decrease entry rate into employment (J68) |
| macroeconomic conditions (above-trend GDP growth) (E66) | increase rate of entry into full-time jobs (J68) |
| higher welfare benefits (I38) | reduce entry into full-time employment (J22) |
| higher welfare benefits (I38) | increase exit rates from full-time employment (J63) |