Compensation for Earnings Risk under Worker Heterogeneity
AbstractWe use two large data sets to estimate the Risk Augmented Mincer equation and test for risk compensation in expected earnings. We replicate earlier findings of a positive premium for risk and a negative premium for skew and add confirmation of the key results if we control for individual ability. We compare risk compensation and risk distributions between some labor market groups and find that immigrants and natives do not differ in risk attitudes, that public sector workers are undercompensated for their risk, and that risk compensation by gender is not fully consistent with higher risk aversion for women. We express concern that a linear compensation model may be too simple.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 76 (2010)
Issue (Month): 3 (January)
Other versions of this item:
- Berkhout, Peter & Hartog, Joop & Webbink, Dinand, 2006. "Compensation for Earnings Risk under Worker Heterogeneity," IZA Discussion Papers 2074, Institute for the Study of Labor (IZA).
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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