Comparing retrospective and panel data collection methods to assess labor market dynamics

There is potential for measurement problems in both retrospective and panel microdata. In this paper we compare results on basic indicators related to labor markets and their dynamics from retrospective and panel survey data in Egypt, in order to determine the conditions under which results are similar or different. Specifically, we (1) assess the consistency of reporting of time-invariant characteristics in different waves of the panel, (2) compare the retrospective and panel data results on past labor market statuses, (3) assess the consistency of estimates of labor market transition rates across two specific dates by comparing panel and retrospective data, (4) assess the consistency of estimates of the level and trends of annual labor market transition rates across retrospective data from different waves of the survey, and (5) assess whether retrospective data can provide accurate trends of labor market aggregates, such as unemployment rates. We find that it is possible to garner useful information on labor market dynamics from retrospective data, but one must be cautious about which information to trust and at what level of detail. We conclude with a discussion of implications for future research as well as future survey design.