Labor Force Participation Dynamics in the Romanian Labor Market

Abstract

We use micro data from the Romanian Labor Force Survey to analyze the effect of the restructuring process on the Romanian labor market. We identify the reallocation mechanisms at work in the Romanian labor market, and we analyze the way personal characteristics influence inviduals' ability to adjust to labor market transformations. Participation decisions made by individuals are modeled as Markov decision processes. The resulting multivariate probit models are estimated using Markov Chain Monte Carlo techniques.