Risk preference and employment contract type
AbstractWe explore the possibility that a systematic relationship exists between employment within a particular type of contract and risk preference. We exploit a set of proxies for risk preference, whereby some of the proxies capture risk loving behaviour (expenditure on gambling, smoking and alcohol) whereas others capture risk averse behaviour (expenditure on life and contents insurance, and unearned income). The empirical analysis, based on pooled cross-section data from the UK Family Expenditure Survey, 1997-2000, provides evidence of a systematic relationship between employment contract type and risk preference, with, for example, self-employed workers being more or less likely to engage in the consumption of 'risky' or financial security products respectively. The results are based on the ordered generalized extreme value model, a relatively infrequently used discrete choice model, which allows for ordering and correlation in the alternatives observed. Copyright 2006 Royal Statistical Society.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Royal Statistical Society in its journal Journal of the Royal Statistical Society: Series A (Statistics in Society).
Volume (Year): 169 (2006)
Issue (Month): 4 ()
Contact details of provider:
Postal: 12 Errol Street, London EC1Y 8LX, United Kingdom
Web page: http://wileyonlinelibrary.com/journal/rssa
More information through EDIRC
Other versions of this item:
- Sarah Brown & Lisa Farrell & Mark N. Harris & John G. Sessions, 2002. "Risk Preference And Employment Contract Type," Department of Economics - Working Papers Series, The University of Melbourne 845, The University of Melbourne.
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 14(4), pages 626-53, October.
- Kanbur, S M, 1979. "Of Risk Taking and the Personal Distribution of Income," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(4), pages 769-97, August.
- Sarah Brown & Lisa Farrell & John G Sessions, 2001. "Employment Contract Matching: An Analysis of Dual Earner Couples and Working Households," Discussion Papers in Economics, Department of Economics, University of Leicester 01/9, Department of Economics, University of Leicester.
- Weitzman, Martin L, 1985.
"The Simple Macroeconomics of Profit Sharing,"
American Economic Review, American Economic Association,
American Economic Association, vol. 75(5), pages 937-53, December.
- Martin L. Weitzman, 1984. "The Simple Macroeconomics of Profit Sharing," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 357, Massachusetts Institute of Technology (MIT), Department of Economics.
- Clark, Kenneth & Drinkwater, Stephen, 2000. "Pushed out or pulled in? Self-employment among ethnic minorities in England and Wales," Labour Economics, Elsevier, Elsevier, vol. 7(5), pages 603-628, September.
- Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(4), pages 719-48, August.
- Borjas, George J & Bronars, Stephen G, 1989.
"Consumer Discrimination and Self-employment,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 97(3), pages 581-605, June.
- Borooah, Vani K & Hart, Mark, 1999. " Factors Affecting Self-Employment among Indian and Black Caribbean Men in Britain," Small Business Economics, Springer, Springer, vol. 13(2), pages 111-29, September.
- Blanchflower, David G & Oswald, Andrew J, 1998.
"What Makes an Entrepreneur?,"
Journal of Labor Economics, University of Chicago Press,
University of Chicago Press, vol. 16(1), pages 26-60, January.
- Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1993.
"Sticking It Out: Entrepreneurial Survival and Liquidity Constraints,"
Working Papers, Princeton University, Department of Economics, Industrial Relations Section.
698, Princeton University, Department of Economics, Industrial Relations Section..
- Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(1), pages 53-75, February.
- Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1993. "Sticking it Out: Entrepreneurial Survival and Liquidity Constraints," NBER Working Papers 4494, National Bureau of Economic Research, Inc.
- van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 68(269), pages 45-62, February.
- George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
- Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
- Hersch, Joni & Pickton, Todd S, 1995. "Risk-Taking Activities and Heterogeneity of Job-Risk Tradeoffs," Journal of Risk and Uncertainty, Springer, Springer, vol. 11(3), pages 205-17, December.
- Robson, Arthur J., 1996. "The Evolution of Attitudes to Risk: Lottery Tickets and Relative Wealth," Games and Economic Behavior, Elsevier, Elsevier, vol. 14(2), pages 190-207, June.
- Small, Kenneth A., 1994. "Approximate generalized extreme value models of discrete choice," Journal of Econometrics, Elsevier, Elsevier, vol. 62(2), pages 351-382, June.
- Fry, T R L, et al, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 69(205), pages 193-205, June.
- Small, Kenneth A, 1987. "A Discrete Choice Model for Ordered Alternatives," Econometrica, Econometric Society, Econometric Society, vol. 55(2), pages 409-24, March.
- Yannis Georgellis & Howard J. Wall, 2000. "Who are the self-employed?," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Nov, pages 15-24.
- Robert B. Barsky & Miles S. Kimball & F. Thomas Juster & Matthew D. Shapiro, 1995. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey," NBER Working Papers 5213, National Bureau of Economic Research, Inc.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
- Martin Gaynor & Paul Gertler, 1995.
"Moral Hazard and Risk Spreading in Partnerships,"
RAND Journal of Economics,
The RAND Corporation, vol. 26(4), pages 591-613, Winter.
- Joni Hersch & W. Kip Viscusi, 1990. "Cigarette Smoking, Seatbelt Use, and Differences in Wage-Risk Tradeoffs," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 202-227.
- Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 58(2), pages 253-66, May.
- Fry, Tim R. L. & Harris, Mark N., 1996. "A Monte Carlo study of tests for the independence of irrelevant alternatives property," Transportation Research Part B: Methodological, Elsevier, Elsevier, vol. 30(1), pages 19-30, February.
- Haynes, Jonathan B. & Sessions, John G., 2013.
"Work now, pay later? An empirical analysis of the pension–pay trade off,"
Economic Modelling, Elsevier,
Elsevier, vol. 30(C), pages 835-843.
- Haynes, Jonathan & Sessions, John, 2011. "Work Now, Pay Later? : An Empirical Analysis of the Pension Pay-Trade Off," Department of Economics Working Papers, University of Bath, Department of Economics 32992, University of Bath, Department of Economics.
- Di Mauro, Carmela & Musumeci, Rosy, 2011. "Linking risk aversion and type of employment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 40(5), pages 490-495.
- Weiping Kostenko & Mark Harris & Xueyan Zhao, 2012.
"Occupational transition and country-of-origin effects in the early stage occupational assimilation of immigrants: some evidence from Australia,"
Applied Economics, Taylor & Francis Journals,
Taylor & Francis Journals, vol. 44(31), pages 4019-4035, November.
- Weiping Kostenko & Mark Harris & Xueyan Zhao, 2009. "Occupational Transition and Country-of-Origin Effects in the Early Stage Occupational Assimilation of Immigrants: Some Evidence from Australia," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2009n20, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Brown, Sarah & Dietrich, Michael & Ortiz-Nuñez, Aurora & Taylor, Karl, 2011. "Self-employment and attitudes towards risk: Timing and unobserved heterogeneity," Journal of Economic Psychology, Elsevier, Elsevier, vol. 32(3), pages 425-433, June.
- C Green & J S Heywood, 2007. "Does profit sharing increase training by reducing turnover?," Working Papers 589032, Lancaster University Management School, Economics Department.
- Simon Parker, 2007. "Which firms do the entrepreneurs come from?," Economics Bulletin, AccessEcon, vol. 10(10), pages 1-9.
- Dawson, Christopher & Henley, Andrew, 2012. "Gender, Risk and Venture Creation Intentions," IZA Discussion Papers 6947, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.