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It is common practice in the literature to compute labor flows from data on stocks. To use these flows in standard search models, it is assumed that the economically relevant movements occur between employment and unemployment. If there are significant flows between labor force participation and...
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measurement errors are uncorrelated. However, as recognized by Bekker, Kapteyn and Wansbeek (BKW) (1997) and Lach (1993) this is …
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