Semi-Markov and Markov labour histories

Publication type

ISER Working Paper Series

Series Number



ISER Working Paper Series


Publication date

June 1, 1994


It is possible to construct a panel of labour market flows from the first wave of the British Household Panel Study. Using this data, a three-state Markov model of labour market transitions is specified and estimated, using the proportional hazard function approach. The three states considered are unemployment, employment and self-employment. The purpose of this exercise is to illustrate how Markovian models can be used to identify the determinants of labour market flows. The sample used consists of mature males (25-55 years old) as this to a large extent eliminates the problems associated with non-participation. Specification tests reveal that the null hypothesis that an individuals labour market history can be described by a Markov process can not be rejected, and hence the time invariant hazard rates are used to evaluate the steady state proportions.


not held in Res Lib - bibliographic reference only



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