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Applying Heterogeneous Transition Models in Labour Economics: The Role of Youth Training in labour Market transitions.

By Fabrizia Mealli and Stephen Pudney

Abstract

We illustrate the difficulties raised by four features of realistic transition models in labour economics: dimensionality, institutional constraints, persistence and sample attrition. We estimate a multi-spell multi-state transition model using longitudinal data on the 1988 cohort of male school-leavers in North-West England. The model predicts transitions between college, the government Youth Training Scheme (YTS), employment and unemployment, allowing for endogenous sample attrition and persistent cross-correlated heterogeneity. We simulate the impact of YTS, allowing for endogenous YTS selection induced by heterogeneity. The main endings are a strong positive effect of YTS participation on employment prospects and a large negative impact of early drop-out from YTS

Topics: Transition models, youth labour market, training, heterogeneity
Publisher: Dept. of Economics, University of Leicester.
Year: 1999
OAI identifier: oai:lra.le.ac.uk:2381/4328

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