Market Volatility and the Structure of US Earnings
This paper studies the relationship between volatility of industry‐specific shipments and real earnings. In an efficiency wage theoretical framework I show that wage premiums for the risk of unemployment depend on the value of the worker's outside offer net of his/her mobility costs. Empirically it is shown that wage premiums for the risk of unemployment markedly vary in a cross section of workers. The main finding is that market volatility changes the return to skill such as labor market experience and education. Its impact markedly varies across occupation groups, with managers receiving returns to labour market experience that significantly increase with product market volatility. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2001.
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Volume (Year): 15 (2001)
Issue (Month): 1 (March)
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