Monday, October 30, 2006
Tweet[IWS] CBO: PROJECTING LABOR FORCE PARTICIPATION & EARNININGS in CBO's Long-Term Microsimulation Model [28 October 2006]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
THE CONGRESS OF THE UNITED STATES
Congressional Budget Office (CBO)
Background Paper
Projecting Labor Force Participation and Earnings in CBO's Long-Term Microsimulation Model
October 2006
http://www.cbo.gov/ftpdocs/76xx/doc7676/10-27-LaborForce.pdf
[full-text, 120 pages]
[excerpt]
The Congressional Budget Office (CBO) uses a microsimulation approach to analyze
the budgetary and distributional impact of Social Security and other age-related policy
issues. This background paper provides a detailed description of one important component
in the microsimulation model: the equations used to project labor force participation,
hours worked, unemployment, and earnings outcomes. The paper describes
the estimated relationships in CBO's microsimulation model, the data sets used, the
principles underlying causal effects, and the properties of the projections over time. In
keeping with CBO's mandate to provide objective, nonpartisan analysis, the paper
makes no policy recommendations.
Contents
Introduction 1
Development of the Model 1
Evaluating Projected Labor Market Outcomes 5
Projecting Labor Market Participation and Hours Worked 6
Labor Force Participation 6
Full-Time Versus Part-Time Employment 11
Hours for Part-Time Workers 17
Unemployment Spells 17
Projecting Individual Earnings Outcomes 20
Predictable Earnings Differences Across Groups and Time 22
Idiosyncratic Earnings Differentials 28
Appendix A: March Current Population Survey Data Used in the
Analysis 75
Appendix B: CBOLT Representative Sample Data 79
Appendix C: Labor Force Equations Used to Model Persistence 83
Appendix D: Permanent and Transitory Earnings Shocks 109
Tables
1. Labor Force Participation Logit Coefficients for Men 33
2. Labor Force Participation Logit Coefficients for Women 37
3. Full-Time Employment Logit Coefficients for Men 41
4. Full-Time Employment Logit Coefficients for Women 45
5. Full-Time or Part-Time Employment Persistence for Men, by Age Group 49
6. Full-Time or Part-Time Employment Persistence for Women, by Age Group 50
7. Part-Time Hours Ordered Logit Coefficients for Men 51
8. Part-Time Hours Ordered Logit Coefficients for Women 55
9. Unemployment Logit Coefficients for Men 59
10. Unemployment Logit Coefficients for Women 63
11. Earnings Coefficients for Men 67
12. Earnings Coefficients for Women 69
13. Annual Earnings Distribution for 50- to 60-Year-Old Men, by Lifetime Earnings Decile 71
14. Annual Earnings Distribution for 50- to 60-Year-Old Women, by Lifetime Earnings Decile 73
C-1. Historical Full-Time Employment Logit Coefficients for Men 84
C-2. Historical Full-Time Employment Logit Coefficients for Women 88
C-3. Historical Part-Time Hours Ordered Logit Coefficients for Men 92
C-4. Historical Part-Time Hours Ordered Logit Coefficients for Women 96
C-5. Historical Unemployment Logit Coefficients for Men 100
C-6. Historical Unemployment Logit Coefficients for Women 104
Figures
1. Steps to Project Earnings in CBO's Microsimulation Model 2
2. Actual and Projected Labor Force Participation for Men, by Birth Cohort 7
3. Actual and Projected Labor Force Participation for Women, by Birth Cohort 8
4. Projected Longitudinal Labor Force Participation for 62-Year-Old Men 12
5. Projected Longitudinal Labor Force Participation for 62-Year-Old Women 13
6. Actual and Projected Full-Time Employment for Men, by Birth Cohort 14
7. Actual and Projected Full-Time Employment for Women, by Birth Cohort 15
8. Number of Part-Time Hours That Men Worked 18
9. Number of Part-Time Hours That Women Worked 19
10. Mean Unemployment Spell for Men, by Age 20
11. Mean Unemployment Spell for Women, by Age 21
12. Predicted Log Full-Time-Equivalent Earnings for Men, by Education Level, Age, and Birth Cohort 25
13. Predicted Log Full-Time-Equivalent Earnings for Women, by Education Level, Age, and Birth Cohort 26
14. Lower Half of the Projected Annual Earnings Distribution 31
15. Upper Half of the Projected Annual Earnings Distribution 32
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
THE CONGRESS OF THE UNITED STATES
Congressional Budget Office (CBO)
Background Paper
Projecting Labor Force Participation and Earnings in CBO's Long-Term Microsimulation Model
October 2006
http://www.cbo.gov/ftpdocs/76xx/doc7676/10-27-LaborForce.pdf
[full-text, 120 pages]
[excerpt]
The Congressional Budget Office (CBO) uses a microsimulation approach to analyze
the budgetary and distributional impact of Social Security and other age-related policy
issues. This background paper provides a detailed description of one important component
in the microsimulation model: the equations used to project labor force participation,
hours worked, unemployment, and earnings outcomes. The paper describes
the estimated relationships in CBO's microsimulation model, the data sets used, the
principles underlying causal effects, and the properties of the projections over time. In
keeping with CBO's mandate to provide objective, nonpartisan analysis, the paper
makes no policy recommendations.
Contents
Introduction 1
Development of the Model 1
Evaluating Projected Labor Market Outcomes 5
Projecting Labor Market Participation and Hours Worked 6
Labor Force Participation 6
Full-Time Versus Part-Time Employment 11
Hours for Part-Time Workers 17
Unemployment Spells 17
Projecting Individual Earnings Outcomes 20
Predictable Earnings Differences Across Groups and Time 22
Idiosyncratic Earnings Differentials 28
Appendix A: March Current Population Survey Data Used in the
Analysis 75
Appendix B: CBOLT Representative Sample Data 79
Appendix C: Labor Force Equations Used to Model Persistence 83
Appendix D: Permanent and Transitory Earnings Shocks 109
Tables
1. Labor Force Participation Logit Coefficients for Men 33
2. Labor Force Participation Logit Coefficients for Women 37
3. Full-Time Employment Logit Coefficients for Men 41
4. Full-Time Employment Logit Coefficients for Women 45
5. Full-Time or Part-Time Employment Persistence for Men, by Age Group 49
6. Full-Time or Part-Time Employment Persistence for Women, by Age Group 50
7. Part-Time Hours Ordered Logit Coefficients for Men 51
8. Part-Time Hours Ordered Logit Coefficients for Women 55
9. Unemployment Logit Coefficients for Men 59
10. Unemployment Logit Coefficients for Women 63
11. Earnings Coefficients for Men 67
12. Earnings Coefficients for Women 69
13. Annual Earnings Distribution for 50- to 60-Year-Old Men, by Lifetime Earnings Decile 71
14. Annual Earnings Distribution for 50- to 60-Year-Old Women, by Lifetime Earnings Decile 73
C-1. Historical Full-Time Employment Logit Coefficients for Men 84
C-2. Historical Full-Time Employment Logit Coefficients for Women 88
C-3. Historical Part-Time Hours Ordered Logit Coefficients for Men 92
C-4. Historical Part-Time Hours Ordered Logit Coefficients for Women 96
C-5. Historical Unemployment Logit Coefficients for Men 100
C-6. Historical Unemployment Logit Coefficients for Women 104
Figures
1. Steps to Project Earnings in CBO's Microsimulation Model 2
2. Actual and Projected Labor Force Participation for Men, by Birth Cohort 7
3. Actual and Projected Labor Force Participation for Women, by Birth Cohort 8
4. Projected Longitudinal Labor Force Participation for 62-Year-Old Men 12
5. Projected Longitudinal Labor Force Participation for 62-Year-Old Women 13
6. Actual and Projected Full-Time Employment for Men, by Birth Cohort 14
7. Actual and Projected Full-Time Employment for Women, by Birth Cohort 15
8. Number of Part-Time Hours That Men Worked 18
9. Number of Part-Time Hours That Women Worked 19
10. Mean Unemployment Spell for Men, by Age 20
11. Mean Unemployment Spell for Women, by Age 21
12. Predicted Log Full-Time-Equivalent Earnings for Men, by Education Level, Age, and Birth Cohort 25
13. Predicted Log Full-Time-Equivalent Earnings for Women, by Education Level, Age, and Birth Cohort 26
14. Lower Half of the Projected Annual Earnings Distribution 31
15. Upper Half of the Projected Annual Earnings Distribution 32
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 12:33 PM
