here's how it works with amsthm
(quoted from the ams author faq):
"When a theorem (proof) begins with a list, how do I keep the first item from running together with the theorem (proof) heading?"
\begin{environment}\leavevmode
\begin{enumerate}\item ...
this will start the list on the next line after the heading.
I used some boxes to calculate the widths:

\documentclass{article}
\usepackage{enumitem}% http://ctan.org/pkg/enumitem
\setbox1=\hbox{$\bullet$}
\setlist{noitemsep, topsep=0pt, parsep=0pt, partopsep=0pt, leftmargin=1.8cm, labelindent=1.2cm, labelwidth=\wd1, itemindent=*, labelsep=\dimexpr0.6cm-\wd1}
\begin{document}
\noindent Here is some text.
\begin{itemize}
\item \( y_i = 1 \) if individual \( i \) is employed is employed is employed is employed is employed is employed is employed is employed is employed is employed,
\item \( y_i = 2 \) if individual \( i \) is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed,
\item \( y_i = 3 \) if individual \( i \) is inactive is inactive is inactive is inactive is inactive is inactive is inactive is inactive is inactive.
\end{itemize}
\noindent \rule{1.2cm}{1pt}$\bullet$ \par
\noindent \rule{1.8cm}{1pt} \par
\setbox1=\hbox{1.}
\setlist{noitemsep, topsep=0pt, parsep=0pt, partopsep=0pt, leftmargin=1.8cm, labelindent=1.2cm, labelwidth=\wd1, itemindent=*, labelsep=\dimexpr0.6cm-\wd1}
\begin{enumerate}
\item \( y_i = 1 \) if individual \( i \) is employed is employed is employed is employed is employed is employed is employed is employed is employed is employed,
\item \( y_i = 2 \) if individual \( i \) is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed is unemployed,
\item \( y_i = 3 \) if individual \( i \) is inactive is inactive is inactive is inactive is inactive is inactive is inactive is inactive is inactive.
\end{enumerate}
\noindent \rule{1.2cm}{1pt}3 \par
\noindent \rule{1.8cm}{1pt} \par
\noindent Here is some text.
\end{document}
The enumitem
documentation presents a graphic of the composition of lengths regarding its horizontal spacing,. leftmargin
is constructed from 4 others lengths; or you could specify all but one using *
and it will be calculated. See section 3 More on horizontal spacing, p 5. As is evident, it may be tricky to find out exactly which lengths go where...

Best Answer
Any customization of a
list
environment, such asitemize
,enumerate
, etc, is most elegantly handled by theenumitem
package.You can use
leftmargin=*
locally,or else you use
in your preamble to make the change global.