Identifying Selection and Duration Dependence Using Elicited Bel iefs
Abstract:
Employment separation hazards decline with tenure, but the forces behind this pattern are not fully understood. It may reflect dynamic selection, as low-quality matches end early and surviving jobs are increasingly composed of better m atches, or structural duration dependence, as separation risk declines with in an ongoing match. We show that, under plausible conditions, the two mech anisms are observationally equivalent based on conventional duration data a lone. They differ, however, in how heterogeneity in separation risk changes over tenure. Although this heterogeneity is not typically observable in st andard transition data, elicited separation probabilities are informative a bout it. We use these beliefs, observed in harmonized survey data from 11 e uro area countries and the United States, to identify the relative importan ce of each channel. To do so, we develop a quantitative model in which work ers learn about match quality from noisy signals while separation risk may also decline within a match. The model delivers closed-form posterior belie fs over match-specific separation rates, thereby making the distinction bet ween dynamic selection and structural duration dependence analytically tran sparent.
DTSTAMP:20260414T180425Z DTSTART:20260414T130000Z DTEND:20260414T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR