Better safe than sorry? The effects of income risk, unemployment risk and the interaction of these risks on wages
AbstractWe examine whether income and unemployment risks are compensated by individual wages. Using a portfolio approach we show that the marginal income risk effect on wages is always positive whereas the marginal unemployment risk effect crucially depends on the income risk. The interaction effect between both risk measures is negative. Using administrative panel data from Germany we confirm the theoretically predicted signs for both risks and their interaction effect.
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Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa13p237.
Date of creation: Nov 2013
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Other versions of this item:
- Wolfgang Nagl, 2012. "Better Safe than Sorry? The Effects of Income Risk, Unemployment Risk and the Interaction of these Risks on Wages," Ifo Working Paper Series Ifo Working Paper No. 148, Ifo Institute for Economic Research at the University of Munich.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
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