Modeling the choice of working when the set of job opportunities is latent

Abstract

In this paper we analyze the decision of "working" versus "not working" within a discrete choice framework, where number of available jobs is confined and related to individual characteristics. In this way the market constraint from the demand side is taken into account. We also accommodate the notion of job specific non-pecuniary attributes in the specification of preferences. We apply panel data to estimate the model. To this end a particular estimation method is developed that accounts for possible serial dependence in the preferences.