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Labor flows in Hungary and Europe

Author

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  • István Konya

    (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Central European University)

Abstract

It is common practice in the literature to compute labor flows from data on stocks. To use these flows in standard search models, it is assumed that the economically relevant movements occur between employment and unemployment. If there are significant flows between labor force participation and inactivity, ignoring the participation decision can lead to biased results. This paper shows that while with three states it is impossible to identify all the flows from publicly available data on stocks, partial identification is possible. A new method is described, which allows the computation of the transition probabilities that are most relevant from a macroeconomic perspective. The method is easy to use, and the paper describes the detailed steps for its implementation to potential users.

Suggested Citation

  • István Konya, 2016. "Labor flows in Hungary and Europe," CERS-IE WORKING PAPERS 1602, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1602
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    File URL: http://econ.core.hu/file/download/mtdp/MTDP1602.pdf
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    References listed on IDEAS

    as
    1. Elsby, Michael W.L. & Hobijn, Bart & Şahin, Ayşegül, 2015. "On the importance of the participation margin for labor market fluctuations," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 64-82.
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    3. repec:hal:spmain:info:hdl:2441/4l136f59vb8mcalu5p6p5li007 is not listed on IDEAS
    4. Daniel Borowczyk-Martins & Gregory Jolivet & Fabien Postel-Vinay, 2013. "Accounting For Endogeneity in Matching Function Estimation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 440-451, July.
    5. Campolmi, Alessia & Gnocchi, Stefano, 2016. "Labor market participation, unemployment and monetary policy," Journal of Monetary Economics, Elsevier, vol. 79(C), pages 17-29.
    6. José María Casado & Cristina Fernández & Juan F. Jimeno, 2015. "Worker flows in the European Union during the Great Recession," Working Papers 1529, Banco de España.
    7. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Labor flows; Inactivity; Measurement; Macro data;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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