Worklife in a Markov Model with Full-time and Part-time Activity

Worklife expectancy within the Markov model, the current paradigm employed by forensic economists to calculate time in and out of the labor force from mortality and transitions into and out of labor force activity, is commonly dated to Smith (1982 and 1986) and the Bureau of Labor Statistics (BLS) Bulletin 2135, which announced the change from the conventional worklife model. Two living states, active at labor force participation and inactive at labor force participation, were used in the work of the BLS and continue to be used in common worklife tables. Methodologically, the theory holds for multiple states, but three living states is an empirical constraint to Markov worklife expectancy calculations due to the enormous longitudinal survey size needed to generate a reliable matrix of transition probabilities.1 A few papers have explored a three-state model in which the active state has been subdivided into the employed and unemployed states of labor force participation. This paper explores another three-state model in which labor force participation is divided into fulltime and part-time activity with the remaining state as not participating in the labor force. Moving from two states of labor force participation to three states provides forensic economists new information relevant to evaluating lifetime output of work-related activity. Interesting topics answered by these worklife tables are what percentage of worklife expectancy is spent in the full-time labor force or what is the difference in total worklife expectancy for those beginning an age in the part-time labor force as opposed to the full-time labor force? We sketch the theory, describe the relevant Current Population Survey (CPS) data, present calculations, and discuss the results.