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on Labour Economics |
| By: | Akay, Alpaslan (University of Gothenburg); Karabulut, Gökhan (Istanbul University); Yilmaz, Levent (Turkish-German University) |
| Abstract: | Using longitudinal data from the German Socio-Economic Panel (GSOEP), this paper investigates how pro-active time-use (e.g., in sports/arts/socializing) relates to subjective well-being of the unemployed and their probability of finding a new job. Allowing for a variety of socio-demographic and -economic observed characteristics, we find that pro-activity is negatively associated with the well-being loss upon unemployment. That is, the negative unemployment shock on their well-being is mitigated through various stress-reducing activities including, in particular, art participation, socializing, going on trips, and visiting a church. We also find that the probability of returning to the labor market later is positively associated with proactivity during the unemployment period. The results are robust to various checks including estimators, measures, and individual personality characteristics which can correlate with time-use activities. |
| Keywords: | life satisfaction, pro-activity, employment, labor markets |
| JEL: | I31 J64 J69 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14117&r=all |
| By: | Hershbein, Brad J. (Upjohn Institute for Employment Research); Holzer, Harry J. (Georgetown University) |
| Abstract: | In this paper, we shed light on the impacts of the COVID-19 pandemic on the labor market, and how they have evolved over most of the year 2020. Relying primarily on microdata from the CPS and state-level data on virus caseloads, mortality, and policy restrictions, we consider a range of employment outcomes—including permanent layoffs, which generate large and lasting costs—and how these outcomes vary across demographic groups, occupations, and industries over time. We also examine how these employment patterns vary across different states, according to the timing and severity of virus caseloads, deaths, and closure measures. We find that the labor market recovery of the summer and early fall stagnated in late fall and early winter. As noted by others, we find low-wage and minority workers are hardest hit initially, but that recoveries have varied, and not always consistently, between Blacks and Hispanics. Statewide business closures and other restrictions on economic activity reduce employment rates concurrently, but do not seem to have lingering effects once relaxed. In contrast, virus deaths—but not caseloads—not only depress current employment, but produce accumulating harm. We conclude with policy options for states to repair their labor markets. |
| Keywords: | COVID-19, pandemic, employment, low-wage workers, state closures |
| JEL: | J0 J1 J6 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14108&r=all |
| By: | Piracha, Matloob (University of Kent); Tani, Massimiliano (University of New South Wales); Cheng, Zhiming (University of New South Wales); Wang, Ben Zhe (Macquarie University, Sydney) |
| Abstract: | The objective of this paper is to analyse how immigrants' ethnic identity correlates with their labour market outcomes. More precisely, we estimate the role of ethnic identity in employment, wages, under-employment (i.e., they would prefer to work more hours but are not given the opportunity), three measures of job satisfaction, overeducation and wages. We further explore whether economic downturn has a differentiated impact on these measures. Using Australian longitudinal data, we find that ethnic identity is strongly associated with employment and wages as well a number of job satisfaction measures. We then split our data and repeat the estimations for before and after the Great Financial Crisis of 2008-09. We find important differences in the way ethnic identity is associated with different measures of labour market outcomes under different economic conditions. Finally, we explore the mechanisms through which some of results could be explained. |
| Keywords: | ethnic identity, assimilation, employment, wages, job quality, overeducation |
| JEL: | F22 J15 J16 J21 Z13 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14123&r=all |
| By: | José Ignacio Garcia-Pérez (Universidad Pablo Olavide & FEDEA); Manuel Serrano-Alarcón (NOVA University of Lisbon & CRES-UPF); Judit Vall Castelló (Universitat de Barcelona & IEB & CRES-UPF) |
| Abstract: | We estimate the labour market and health effects of a long-term unemployment (LTU) subsidy targeted to middle aged disadvantaged workers. In order to do so, we exploit a Spanish reform introduced in July 2012 that increased the age eligibility threshold to receive the subsidy from 52 to 55. Using a within-cohort identification strategy, we show that men ineligible for the subsidy were more likely to leave the labour force. In terms of health outcomes, although we do not report impacts on hospitalizations when considering the whole sample, we do find significant results when we separate the analysis by main diagnosis and gender. More specifically, we show a reduction by 12.9% in hospitalizations due to injuries as well as a drop by 2 percentage points in the probability of a mental health diagnosis for men who were eligible for the LTU subsidy. Our results highlight the role of long-term unemployment benefits as a protecting device for the health (both physical and mental) of middle aged, low educated men who are in a disadvantaged position in the labour market. |
| Keywords: | Disadvantaged workers, unemployment subsidies, health effects |
| JEL: | I10 J65 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2020-16&r=all |
| By: | Chen, Yen-Chien (National Chi Nan University); Fan, Elliott (National Taiwan University); Liu, Jin-Tan (National Taiwan University) |
| Abstract: | We combine multiple administrative datasets from Taiwan to evaluate the degree to which the adverse divorce effect on the child's higher education operates through deprivation of economic resources. Using one million siblings, we find that parental divorce occurring at ages 13-18 significantly decreased the likelihood of university admission at age 18. Among the same siblings, we find that those who experienced parental job loss (due to firm closure) occurring at the same ages did not suffer a declined likelihood of university admission, although parental job loss led to a significant and persistent reduction in family income. After carefully examining the compatibility of the parental divorce effect and parental job-loss effect, we conclude that reduced income is unlikely a major mechanism delivering the parental divorce effect. Further examinations show that boys and girls are equally susceptible, and younger teenagers are more susceptible than the more mature ones, to parental divorce. |
| Keywords: | parental divorce, parental job loss, college admission |
| JEL: | I20 J12 J64 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14122&r=all |
| By: | Berton, Fabio (University of Turin); Dughera, Stefano (University Paris Ouest-Nanterre); Ricci, Andrea (INAPP – Institute for Public Policy Analysis) |
| Abstract: | In this paper we study the effect of unions on product and process innovation both theoretically and empirically. We propose a Cournot duopoly model where labor productivity is allowed to differ across unionized and non-unionized sectors due to collective voice mechanism. Our findings suggest that the traditional hold-up view whereby unions discourage innovation does not necessarily survive. When the voice effect is neither too strong nor too low, the unionized sector outperforms the market in terms of process innovation, while the effect on product innovation is strictly increasing in the voice power. Our empirical analysis of a large representative sample of Italian firms supports the model's predictions in both pooled OLS, fixed effects and IV. |
| Keywords: | innovation, labor-unions |
| JEL: | J51 O31 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14102&r=all |
| By: | David J. Harding; Lisa Sanbonmatsu; Greg J. Duncan; Lisa A. Gennetian; Lawrence F. Katz; Ronald C. Kessler; Jeffrey R. Kling; Matthew Sciandra; Jens Ludwig |
| Abstract: | Although non-experimental studies find robust neighborhood effects on adults, such findings have been challenged by results from the Moving to Opportunity (MTO) residential mobility experiment. Using a within-study comparison design, this paper compares experimental and non-experimental estimates from MTO and a parallel analysis of the Panel Study of Income Dynamics (PSID). Striking similarities were found between non-experimental estimates based on MTO and PSID. No clear evidence was found that different estimates are related to duration of adult exposure to disadvantaged neighborhoods, non-linear effects of neighborhood conditions, magnitude of the change in neighborhood context, frequency of moves, treatment effect heterogeneity, or measurement, although uncertainty bands around our estimates were sometimes large. One other possibility is that MTO-induced moves might have been unusually disruptive, but results are inconsistent for that hypothesis. Taken together, the findings suggest that selection bias might account for evidence of neighborhood effects on adult economic outcomes in non-experimental studies. |
| JEL: | H0 I3 J0 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28454&r=all |
| By: | Bachan, Ray (University of Brighton); Bryson, Alex (University College London) |
| Abstract: | The gender wage gap has closed gradually in the United Kingdom, as in other countries, but convergence is slower among top earners. Using linked employer-employee data over two decades we examine the gap among university Vice Chancellors who are among the most highly paid employees in the UK. Traditionally dominated by men the occupation has experienced a recent influx of women. The substantial gender wage gap of 12 log points in the first decade of the 21st Century closed markedly during the second decade, becoming statistically non-significant in later years. The closure in the gap is accounted for by change in the attributes of male and female VCs and the universities they lead - in particular, the financial performance of universities employing female VCs. The unexplained component of the gap is small and explains none of the convergence in the gap. A "new starter" wage penalty women faced in the early 2000s disappeared. However, women continued to receive a lower wage when replacing an outgoing male Vice Chancellor, whereas no differential was apparent between incoming male Vice Chancellors and the women they replaced. |
| Keywords: | gender wage gap, vice chancellors, higher education, decompositions, linked employer-employee data |
| JEL: | J16 J31 J44 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14110&r=all |
| By: | Giles, John T. (World Bank); Meng, Xin (Australian National University); Xue, Sen (Jinan University); Zhao, Guochang (Southwest University of Finance and Economics, Chengdu) |
| Abstract: | This paper uses a randomized information intervention to shed light on whether poor understanding of social insurance, both the process of enrolling and costs and benefits, drives the relatively low rates of participation in urban health insurance and pension programs among China's rural-urban migrants. Among workers without a contract, the information intervention has a strong positive effect on participation in health insurance and, among younger age groups, in pension programs. Migrants are responsive to price: in cities where the premia are low relative to earnings, information induces health insurance participation, while declines are observed in cities with high relative premia. |
| Keywords: | migration, social insurance, information, randomised controlled trial |
| JEL: | H53 H55 J46 J61 O15 O17 O53 P35 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14093&r=all |
| By: | Afridi, Farzana (Indian Statistical Institute); Mahajan, Kanika (Ashoka University); Sangwan, Nikita (Indian Statistical Institute) |
| Abstract: | The Covid-19 pandemic has highlighted the potential of social protection programs in mitigating labor market shocks. We examine the role of one of the world's largest employment guarantee schemes, India's MG-NREGA, in cushioning job losses in one of the worst affected economies due to the pandemic. Our findings indicate that regions with greater historical state capacity to provide public workdays under the scheme generated relatively higher employment during the pandemic. Consequently, an increase in state capacity by one MG-NREGA workday per rural inhabitant in a district reduced job losses in rural areas in April-August 2020 by 7% overall and by 74% for rural women, over baseline employment rate. These cushioning effects strengthened as the mobility restrictions eased and were larger for women who were less mobile and less skilled. Our results suggest that employment guarantee programs can protect livelihoods, but for certain demographic groups relatively more than others depending on the nature and skill level of work offered. |
| Keywords: | employment, COVID-19, public employment guarantee, MG-NREGA, women |
| JEL: | J68 H31 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14099&r=all |
| By: | Margaux Suteau (Université de Cergy-Pontoise, THEMA) |
| Abstract: | There is increasing evidence that land rights are an e ective means of improving women's conditions. This paper exploits an exogenous change in the possibility of obtaining land rights for women in India and estimates its effects on women's empowerment. In particular, I use the 1976 to 1994 amendments to the Hindu Succession Act (HSA) in five states. I demonstrate that in these states, young women's education increased by approximately one year. I also find that the amendments did not a ect female labor force participation but did increase young women's age at marriage. I replicate this analysis using the 2005 national reform, and I obtain the same results. This finding shows that despite women's empowerment in the marriage market due to their increase in education, there are still many factors preventing them from increasing their labor supply. From a public policy perspective, this paper demonstrates that social norms governing marital behaviors can mitigate the effects of land rights. |
| Keywords: | Hindu Succession Act, Education, Female labor force participation, Marriage market, India. |
| JEL: | J16 I20 J12 J21 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2020-17&r=all |
| By: | Elena Bastianelli (UDipartimento di Culture, Politica e Società , Università di Torino); Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze) |
| Abstract: | The present study contributes to a more comprehensive understanding of the relation between employment instability and union dissolution. To address the oversights of previous research, we disentangle the effect of employment instability on union dissolution by: (i) considering not only the effect of joblessness, but also the type of employment contract; (ii) evaluating both status and the accumulation of instability over the life course; and (iii) detecting variation across gender and generations. We focus on Italy, applying event-history techniques to the 2009 and 2016 Italian Multipurpose Survey on Family and Social Subjects, observing cohorts from 1950 to 1980. Our results suggest that the effect of employment instability on union dissolution is gender-specific: joblessness and limited-time employment are facilitators for men’s dissolution, while joblessness is an inhibitor for women’s dissolution. Nonetheless, these differences weaken across recent cohorts as gender equality gains relevance in the labor market. We also highlight the crucial role of the persistence of instability in unpacking the association between employment instability and union dissolution. |
| Keywords: | Union dissolution; Employment instability; Joblessness; Time-limited employment; Gender |
| JEL: | J12 J41 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:fir:econom:wp2021_04&r=all |
| By: | Marinescu, Ioana E. (University of Pennsylvania); Qiu, Yue (Temple University); Sojourner, Aaron (University of Minnesota) |
| Abstract: | Wage inequality does not fully capture differences in job quality. Jobs also differ along other key dimensions, including the prevalence of labor rights violations. We construct novel measures of labor violation rates using data from federal agencies. Within local industries over time, a 10% increase in the average wage is associated with a 0.15% decrease in the number of violations per employee and a 4% decrease in fines per dollar of pay. Reduced labor market concentration and increased union coverage rate are also associated with reductions in labor violations. Overall, labor violations are regressive: they increase inequality in job quality. |
| Keywords: | wage differentials, inequality, worker power, labor rights |
| JEL: | J31 J83 J32 J33 J28 K31 K42 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14112&r=all |
| By: | Hensvik, Lena (Uppsala University); Le Barbanchon, Thomas (Bocconi University); Rathelot, Roland (University of Warwick) |
| Abstract: | This paper measures the job-search responses to the COVID-19 pandemic using realtime data on vacancy postings and job ad views on Sweden’s largest online job board. First, new vacancy postings drop by 40%, similar to the US. Second, job seekers respond by searching less intensively, to the extent that effective labour market tightness increases during the first three months after the COVID outbreak. Third, they redirect their search towards less severely hit occupations, beyond what changes in vacancies would predict. Overall, these job search responses have the potential to amplify the labour demand shock. |
| Keywords: | coronavirus; search intensity; search direction; labour demand shock; job vacancies; online job board |
| JEL: | E24 J21 J22 J23 J62 J63 J64 |
| Date: | 2021–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2021_001&r=all |
| By: | Tscheuschner, Paul |
| Abstract: | We propose an overlapping generations framework in which life expectancyis determined endogenously by governmental health investments. As a novelty, we are able to examine the feedback effects between life expectancy and R&D-driven economic growth for the transitional dynamics. We find that i) higher survival induces economic growth through higher savings and higherlabor force participation; ii) longevity-induced reductions in fertility hampereconomic development; iii) the positive life expectancy effects of larger savingsand higher labor force participation outweigh the negative effect of a reductionin fertility, and iv) there exists a growth-maximizing size of the health caresector that might lie beyond what is observed in most countries. Altogether, the results support a rather optimistic view on the relationship between lifeexpectancy and economic growth and contribute to the debate surroundingrising health shares and economic development. |
| Keywords: | long-run growth,horizontal innovation,increasing life expectancy,welfare effects of changing longevity,size of health-care sectors |
| JEL: | I15 J11 J13 J17 O41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:012021&r=all |
| By: | Ling Li (University of Wisconsin-Parkside); Perry Singleton (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244) |
| Abstract: | This study measures the effect of industrial robots on workplace safety at the commuting zone level, exploiting potentially exogenous variation in robot exposure due to technological progress. Workplace safety is measured by workers involved in severe or fatal accidents inspected by the Occupational Safety and Health Administration. From 2000 to 2007, we find that one additional robot in exposure per 1,000 workers decreased the OSHA accident rate at the mean by 15.1 percent. We also find that robot exposure decreased OSHA violations and accidents more likely to be affected by robot penetration, specifically those involving machinery or electrical. |
| Keywords: | Industrial Robots, Automation, Workplace Safety, Occupational Safety |
| JEL: | J81 I10 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:239&r=all |
| By: | Becker, Sascha O. (Monash University); Lindenthal, Volker (University of Munich); Mukand, Sharun (University of Warwick); Waldinger, Fabian (University of Munich) |
| Abstract: | We study the role of professional networks in facilitating the escape of persecuted academics from Nazi Germany. From 1933, the Nazi regime started to dismiss academics of Jewish origin from their positions. The timing of dismissals created individual-level exogenous variation in the timing of emigration from Nazi Germany, allowing us to estimate the causal effect of networks for emigration decisions. Academics with ties to more colleagues who had emigrated in 1933 or 1934 (early émigrés) were more likely to emigrate. The early émigrés functioned as "bridging nodes" that helped other academics cross over to their destination. Furthermore, we provide some of the first empirical evidence of decay in social ties over time. The strength of ties also decays across space, even within cities. Finally, for high-skilled migrants, professional networks are more important than community networks. |
| Keywords: | Nazi Germany, professional networks, Antisemitism |
| JEL: | I20 I23 I28 J15 J24 N34 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14120&r=all |
| By: | Gürtzgen, Nicole (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Lochner, Benjamin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Pohlan, Laura (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Berg, Gerard J. van den |
| Abstract: | "This paper studies the effects of the high-speed internet expansion on the match quality of new hires. We combine data on internet availability at the local level with German individual register and vacancy data. Results show that internet availability has no major impact on the stability of new matches and their wages. We confirm these findings using vacancy data, by explicitly comparing match outcomes of online and non-online recruits. Further results show that online recruiting not only raises the number of applicants and the share of unsuitable candidates per vacancy, but also induces employers to post more vacancies." (Author's abstract, IAB-Doku) ((en)) Additional Information auch erschienen als: IZA discussion paper, 14031 |
| JEL: | J64 H40 L96 C26 |
| Date: | 2021–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:202102&r=all |
| By: | Diane Pelly (School of Economics, University College Dublin); Michael Daly (Department of Psychology, Maynooth University); Liam Delaney (Behavioural Science Unit, London School of Economics); Orla Doyle (School of Economics, University College Dublin) |
| Abstract: | The potential impact of COVID-19 restrictions on worker well-being is currently unknown. In this study we examine 15 well-being outcomes collected from 621 full-time workers assessed before (November, 2019 - February, 2020) and during (May-June, 2020) the COVID-19 pandemic. Fixed effects analyses are used to investigate how the COVID-19 restrictions and involuntary homeworking affect well-being and job performance. The majority of worker well-being measures are not adversely affected. Homeworkers feel more engaged and autonomous, experience fewer negative emotions and feel more connected to their organisations. However, these improvements come at the expense of reduced homelife satisfaction and job performance. |
| Keywords: | COVID-19 restrictions, workers, homeworking, subjective well-being, productivity, mental health, job satisfaction, engagement |
| JEL: | J08 J24 I31 |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:202101&r=all |
| By: | Hetschko, Clemens; Knabe, Andreas; Schöb, Ronnie |
| Abstract: | This chapter introduces identity utility to the study of (un)employment and (un)happiness. The concept is described in terms of an augmented utility function, the implications of which are assessed in light of the empirical literature on unemployment and well-being. Studies on unemployed persons' affective and cognitive well-being allow assessing the importance of the loss of identity utility relative to other nonmonetary consequences of joblessness, such as fewer social contacts and a lack of a structure in daily life. Unlike life satisfaction, unemployment leaves affective well-being mostly unaffected, which points to a major relevance of the loss of identity. This view is corroborated further by studies on the importance of the social norms to work and be self-reliant for the life satisfaction of the unemployed, as well as by studies showing the positive life satisfaction effect of retirement on unemployed workers. Based on this strong evidence for identity utility losses of unemployed persons, the notion of identity utility is used to explain heterogeneity in the effect of unemployment on life satisfaction. It is also linked to further consequences of unemployment, such as social exclusion and stigmatization. Moreover, this chapter uses identity utility to assess the likely effectiveness of labor market policies in alleviating the misery of the unemployed. Finally, research on work, happiness and identity is reconciled with a more standard economics view on labor supply based on studies examining the impact of working hours on workers' well-being. |
| Keywords: | employment status,identity,subjective well-being,affective and cognitive well-being |
| JEL: | D91 I31 J26 J60 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:783&r=all |
| By: | Nam, Minhyuk (Sogang University); Lee, Soohyung (Seoul National University) |
| Abstract: | We examine the impact of COVID-19 on employment in South Korea as of June 2020. To estimate the causal effect, we use two complementary methods. First, using individual-level data without residence information, we estimate the effects by controlling for detailed characteristics of individuals. Second, using aggregate data without individual characteristics, we exploit the regional variation in the intensity of COVID-19 to measure the effects. We find that the COVID-19 pandemic decreased the employment rate by 0.82%p and increased the unemployment rate by 0.29%p. These estimated effects are 90%–140% larger than those of the 2008 Financial Crisis. |
| Keywords: | COVID-19, financial crisis, unemployment, employment |
| JEL: | E3 J2 J6 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14101&r=all |
| By: | Belot, Michèle (Cornell University); Kircher, Philipp (Cornell University); Muller, Paul (Vrije Universiteit Amsterdam) |
| Abstract: | We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on lottery tickets with high rewards. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We validate our elicitation method experimentally on two student samples: one asked in December when their current budget is reduced by extraordinary expenditures for Christmas gifts; the other asked in February when no such extra constraints exist. We illustrate an application of our method with unemployed job seekers which naturally have income/consumption variation. |
| Keywords: | time preferences, experimental elicitation, job search, hyperbolic discounting |
| JEL: | D90 J64 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14091&r=all |
| By: | Daniel C. Schneider (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Alyson A. van Raalte (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Discrete-time multistate life tables are attractive because they are easier to understand and apply in comparison to their continuous-time counterparts. While such models are based on a discrete time grid, it is often useful to calculate derived magnitudes, like state occupation times, under assumptions that posit that transitions take place at other times, such as mid-period. Unfortunately, currently available models allow only a very limited set of choices about transition timing. We propose to utilize Markov chains with rewards as an intuitive and general way of modelling the timing of transitions. Combining existing discrete-time models with the rewards methodology results in an estimation strategy that features easy parameter estimation, flexible transition timing, and little theoretical overhead. We illustrate the usefulness of rewards- based multistate life tables with SHARE data for the estimation of working life expectancy using different retirement transition timings. We also demonstrate that, for the single-state case, the rewards-based multistate life tables match traditional life table methods exactly. We provide code to replicate all results of the paper, as well as R and Stata packages for general use of the method proposed. |
| JEL: | J1 Z0 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2021-002&r=all |