A semi-Markov model of turnover, resulting from optimizing behavior on the part of workers, is developed. Duration dependence in the transition out of employment is modelled as resulting from a layoff probability which decreases with tenure. Some preliminary results, based on DIME data, are...

The problem in default probability estimation for low-default portfolios is that there is little relevant historical data information. No amount of data processing can fix this problem. More information is required. Incorporating expert opinion formally is an attractive option