Book Description

This dissertation contains three essays in labour market mobility. These essays employ a dynamic multinomial logit model with discrete factor approximation for the specification of unobserved individual heterogeneity and Wooldridge's approach for controlling the endogeneity problem of initial conditions. The dynamic structural of the model is assumed to follow a first order Markov process. The data is taken from longitudinal levels of Statistics Canada's Survey of Labour and Income Dynamics (SLID) and is restricted to males aged 25 to 55 between 1993 and 2004. I examine and discuss the importance of structural and spurious state dependence in three different aspects of labour market mobility. Relevant policy implications are discussed. The first essay compares immigrants and natives in self-employment transitions among four mutually exclusive and exhaustive states of paid-employment, self-employment, unemployment, and being out of the labour force. The second essay explores the factors explaining immigrant-native differences in stability, downward, and upward wage mobility rates. The final essay provides a comprehensive research on earnings dynamics of immigrants and natives within and between Canada and Denmark. This essay also employs Danish administrative registered dataset for the period 1994-2003. Empirical results show that state dependence exists in all states of labour market mobility with different degrees for immigrants and natives. Not all observed persistence is structural, some portion is due to the unobservable factors.