Compensation for Earnings Risk under Worker Heterogeneity
AbstractWe use two large Dutch datasets 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 find that immigrants have graduated in more risky educations but obtain identical risk compensation. Among recent graduates, women receive higher risk compensation than men, consistent with their higher risk aversion, while for a labour force cross-section, lower average compensation for women is consistent with their presence in less risky educations. Lower average compensation for vocational graduates than for university graduates is consistent with presumed higher risk aversion and lower observed risk.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2074.
Length: 27 pages
Date of creation: Apr 2006
Date of revision:
Publication status: published in: Southern Economic Journal, 2010, 76 (3), 762–790
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Other versions of this item:
- Peter Berkhout & Joop Hartog & Dinand Webbink, 2010. "Compensation for Earnings Risk under Worker Heterogeneity," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 762-790, January.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
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.:
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