Analysing Plant Closure Effects Using Time-Varying Mixture-of-Experts Markov Chain Clustering

In this paper, we study data on discrete labor market transitions from Austria. In particular, we follow the careers of workers who experience a job displacement due to plant closure and observe - over a period of forty quarters - whether these workers manage to return to a steady career path. To an...

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Bibliographische Detailangaben
Link(s) zu Dokument(en):IHS Publikation
Hauptverfasser: Frühwirth-Schnatter, Sylvia, Pittner, Stefan, Weber, Andrea, Winter-Ebmer, Rudolf
Format: IHS Series NonPeerReviewed
Sprache:Englisch
Veröffentlicht: 2016
Beschreibung
Zusammenfassung:In this paper, we study data on discrete labor market transitions from Austria. In particular, we follow the careers of workers who experience a job displacement due to plant closure and observe - over a period of forty quarters - whether these workers manage to return to a steady career path. To analyse these discrete-valued panel data, we develop and apply a new method of Bayesian Markov chain clustering analysis based on inhomogeneous first order Markov transition processes with time-varying transition matrices. In addition, a mixture-of-experts approach allows us to model the prior probability to belong to a certain cluster in dependence of a set of covariates via a multinomial logit model. Our cluster analysis identifies five career patterns after plant closure and reveals that some workers cope quite easily with a job loss whereas others suffer large losses over extended periods of time.