Bivariate Probit Models of Labour Market Status
In Chap. 4 we analysed women's employment in primary sector occupations using a univariate probit model and we restricted the sample to labour market participants only. The dependent variable was a primary sector employment dummy (PRIM), where primary sector occupations were derived from a modified ANU2 job prestige scale discussed in Chap. 4.
The model used in Chap. 4 mainly focused on the role of the employers' hiring decisions to estimate the probability of being employed in a primary sector job, ignoring women's decisions about whether or not to participate in the labour market. It is arguable that such an approach might not be appropriate unless labour market participation decisions and employers' hiring decisions are independent. The probability of employment in the primary sector is a conditional probability, which depends on women's prior participation in the labour market. In other words, a woman cannot have a primary sector job if she has not elected to enter the labour market. Thus, estimating a woman's probability of being employed in the primary sector as a univariate probit from a labour market participant might not provide correct probability estimates unless these two decisions are independent in the relevant bivariate distribution function.
We have established that there are strong theoretical reasons why persons with limited human capital attributes are less likely to obtain primary sector jobs, and this is supported by a wealth of empirical evidence. Although there is much empirical evidence regarding the relationship between labour market participation and human capital attributes, the theoretical arguments seem less compelling. It can be argued that any person who needs to support him or herself and does not have access to social security, almost by definition must be a labour market participant. If this is so, human capital attributes might not be very important in the participation decisions of some women.
KeywordsLabour Market Human Capital Probit Model Labour Market Status Labour Market Participation
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