An extended Markov-switching model approach to modelling latent heterogeneity in departmentalized manpower systems

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Abstract In recent works in manpower planning interest has been awakened in modelling manpower systems in departmentalized framework. This, as a form of disaggregation, may solve the problem of observable heterogeneity but not latent heterogeneity; it rather opens up other aspects of latent heterogeneity hitherto unaccounted for in classical (non-departmentalized) manpower models. In this paper a multinomial Markov-switching model is formulated for investigating latent heterogeneity in intra-departmental and interdepartmental transitions in departmentalized manpower systems. The model incorporates the mover-mediocre-stayer principle. The use of EM algorithm for estimation of the model parameters and a validity test for assessing the model performance in comparison to the classical Markov manpower model are presented.

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