Volume 24, Number 2 (Spring) 1989
Gönül, Füsun. 1989. "Dynamic Labor Force Participation Decisions of Males in the Presence of Layoffs and Uncertain Job Offers." Journal of Human Resources 24(2):195-220.
This paper presents a utility maximization model of workers who make decisions to work or not over a lifetime. The objective is to maximize the presented discounted value of utility arising from the participation decision. In addition to duration dependence introduced through time-variant job offer and layoff probabilities, state dependence enters the model by the existence of a different risk while working, namely, the dismissal risk, than the one while not working, namely, the possibility of no job offers. A dynamic programming algorithm is solved and estimated within a maximum likelihood routine, with data from the National Longitudinal Survey's youth cohort.
The author is affiliated with Carnegie Mellon University, University of California, and University of Chicago. An earlier version of this paper was presented at the 1986 Summer Econometric Society Meetings at Duke University. She is indebted to Randall J. Olsen for helpful comments, and also thanks an anonymous referee, Donald O. Parsons, Steven M. Sheffrin, and Steven Stern whose comments significantly improved earlier drafts of the paper. Partial financial support by the William and Flora Hewlett Foundation is gratefully acknowledged.
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