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A behavioral portfolio approach to multiple job holdings

Author

Listed:
  • Jaroslava Hlouskova

    () (Institute for Advanced Studies
    Thompson Rivers University)

  • Panagiotis Tsigaris

    () (Thompson Rivers University)

  • Anetta Caplanova

    () (University of Economics in Bratislava)

  • Rudolf Sivak

    () (University of Economics in Bratislava)

Abstract

In this paper we present an alternative explanation of multiple job holdings. It is based on a behavioral portfolio approach using prospect theory. Multiple job holdings is often a result of economic hardship but also because of peer comparisons. Workers may decide to take on a risky job like self-employment and engage into new ventures but also hold on to a safe employment in order to stay as close as possible to their reference level. While multiple job holdings might be the case for some, many others might decide to keep on working only at a safe job and do not engage into new risky ventures. This paper presents a behavioral economics model to explain such decisions. We find that the decision to hold multiple jobs depends on the degree of loss aversion, the value of the reference level and on the expected return in the risky venture. The worker will not seek for a risky job if she has an income reference level equal to what she can earn from a safe job. At any other reference level, the worker will seek new ventures provided she is compensated with a higher expected wage and is sufficiently loss averse.

Suggested Citation

  • Jaroslava Hlouskova & Panagiotis Tsigaris & Anetta Caplanova & Rudolf Sivak, 2017. "A behavioral portfolio approach to multiple job holdings," Review of Economics of the Household, Springer, vol. 15(2), pages 669-689, June.
  • Handle: RePEc:kap:reveho:v:15:y:2017:i:2:d:10.1007_s11150-015-9293-x
    DOI: 10.1007/s11150-015-9293-x
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    References listed on IDEAS

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    Cited by:

    1. Etienne Lalé, 2019. "Search and Multiple Jobholding," Upjohn Working Papers and Journal Articles 19-305, W.E. Upjohn Institute for Employment Research.
    2. Hlouskova, Jaroslava & Tsigaris, Panagiotis, 2020. "A behavioral economic approach to multiple job holdings with leisure," IHS Working Paper Series 23, Institute for Advanced Studies.
    3. Olena Kostyshyna & Etienne Lalé, 2019. "On the Evolution of Multiple Jobholding in Canada," Staff Working Papers 19-49, Bank of Canada.

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    More about this item

    Keywords

    Multiple job holdings; Risk taking; Prospect theory; Reference level; Loss aversion;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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