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The life-cycle and the business-cycle of wage risk — Cross-country comparisons

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  • Bayer, Christian
  • Juessen, Falko

Abstract

We provide evidence on life-cycle and business-cycle fluctuations in the dispersion of household-level wage innovations, comparing the US, the UK, and Germany. First, we find that household characteristics explain about 25% of the dispersion in wages within an age group in all three countries. Second, the cross-sectional variance of wages is almost linearly increasing in household age in all three countries, but with increments being smaller in the European data. Third, wage risk is procyclical in Germany while it is countercyclical in the US and acyclical in the UK.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 3 ()
Pages: 831-833

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:831-833

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Wage risk; Life cycle; Uncertainty fluctuations; Heterogeneity;

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References

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  1. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2009. "Unequal we stand: an empirical analysis of economic inequality in the United States, 1967-2006," Staff Report, Federal Reserve Bank of Minneapolis 436, Federal Reserve Bank of Minneapolis.
  2. Nicholas Bloom, 2009. "The Impact of Uncertainty Shocks," Econometrica, Econometric Society, Econometric Society, vol. 77(3), pages 623-685, 05.
  3. Dirk Krüger, 2009. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 09184, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  4. Michelle Alexopoulos & Jon Cohen, 2009. "Uncertain Times, uncertain measures," Working Papers tecipa-352, University of Toronto, Department of Economics.
  5. Kjetil Storesletten & Chris I. Telmer & Amir Yaron, 2004. "Cyclical Dynamics in Idiosyncratic Labor Market Risk," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(3), pages 695-717, June.
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Cited by:
  1. Bayer, Christian & Juessen, Falko, 2012. "Happiness and the Persistence of Income Shocks," IZA Discussion Papers 6771, Institute for the Study of Labor (IZA).
  2. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Families and social security," EcoMod2013 5280, EcoMod.

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