24 Pages Posted: 29 Oct 2011
Date Written: October 1, 2011
This paper analyzes the intertemporal labor force participation behavior of married women using an annual longitudinal sample from the German Socio-Economic Panel. A predominant characteristic of annual participation behavior is the high degree of persistence in individual participation decisions. We use several model specifications to distinguish among the alternative explanations of this serial persistence: state dependence, individual unobserved heterogeneity, and serial correlation in the transitory error component. Similar to Hyslop (1999), we employ both dynamic “fixed effects” linear probability models as well as several static and dynamic probit models with “random effects” and serially correlated errors. In addition, we apply the estimators proposed by Honoré and Kyriazidou (2000) for dynamic “fixed effects” discrete choice models. We find strong state dependence, and substantial effects for fertility variables. Transitory and permanent non-labor income have in general small effects.
Keywords: State dependence, serial correlation, heterogeneity, panel data, intertemporal labor force participation, GSOEP
JEL Classification: C33, C36, J22
Suggested Citation: Suggested Citation
Croda, Enrica and Kyriazidou, Ekaterini and Polycarpou, Ioannis, Intertemporal Labor Force Participation of Married Women in Germany: A Panel Data Analysis (October 1, 2011). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 17/WP/2011. Available at SSRN: https://ssrn.com/abstract=1950603