Examining the Econom(etr)ic Relevance of Discretizing Panel Data: an Application to the Belgian Labour Market

Abstract

ABSTRACT: The object of this paper is to explore how to use administrative data for econometric purposes when these data measure total annual duration spent in various states. A basic issue addressed is whether the information extracted through categorising continuous data actually defines an economically meaningful concept of an individual position on the labour market. The main findings are that discretization indeed leads interpretable transitions on the labour market, and that the mobility between positions rather low in Belgium.