Explaining the Transition Probabilities in the Peruvian Labor Market

This study has two aims. First, to establish the main features of labor mobility; and second, to analyze the determinants of the main transitions between states of occupation. In order to achieve the first objective, we utilize transition matrices, on the basis of which different indicators are calculated that allow the characterization of the dynamics of labor markets in Peru. These calculations, in addition to the results of previous works, enable us to establish a number of stylized facts about labor mobility. Regarding the second objective, and having identified the loss of occupation as one of the most important transitions, an analysis of logit regression is performed in order to establish the correlation between supply and demand factors and the probability of staying occupied or losing that status. Panel samples of household surveys on a national scale for the period 2007-2010 are employed. The results indicate that there is an important degree of mobility where important proportions of the population switch between states, but in aggregate these transitions tend to cancel out. With respect to the determinants of the transition, the important role of labor demand has been identified; it was captured with levels in employment and their changes in time.

Keywords
Employment, Logit models, Markovian transition probabilities, Peruvian labor markets

JEL Classification

J21, J23, J60, J62