In and out of employment: Effects in panel and life-history data

Longitudinal data collected through panel studies or life-history surveys represent a rich source for analysing movements in the labour market over the life-course. However, concerns arise over the proper design to collect these data reliably. This paper addresses the substantive issue related to the determinants of movements in the labour market tackling the methodological concerns referring the reliability of different survey designs (prospective versus retrospective) for that purpose. The focus, in particular, is on the extent to which the survey design can affect the results of the analysis of mechanisms underlying labour markets dynamics. Using discrete-time event history models, the effects of factors possibly affecting labour market transitions using prospective and retrospective surveys are estimated and compared (the German Socio-Economic Panel and the German LifeHistory Study). Overall, few differences are found across surveys. Such differences are mainly in effect sizes and rarely in their directions. The most significant differences are found in the effects of human capital investments. In some cases, familial responsibilities connected with marriage and children also show different effects. However, results confirm that career investments and disinvestments protect from exiting and hinder reentry, respectively. Familial responsibilities hamper employment participation for women, while increasing it for men. No clear evidence of temporal connections in recalling between work and family spheres are found. The paper contributes to raising the awareness of the pros and cons of different types of surveys collecting longitudinal data. 2011 Elsevier Ltd. All rights reserved. * Tel.: +1 919 515 9004; fax: +1 203 903 4414. E-mail address: [email protected]. 1 This strategy has been used in national as well as comparative panel surveys, to collect information on the life histories of the respondents entering the panel, usually in the first wave, but sometimes at later waves, to collect specific information on previous biographies (work, marital, etc). 2 In the course of the paper these two types of designs are referred to using the terms prospective data/prospective surveys or panel data/panel surveys are used and retrospective data/survey or life-history data/ surveys, respectively.