IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/v14y1996i4p626-53.html
   My bibliography  Save this article

An Empirical Analysis of Risk Aversion and Income Growth

Author

Listed:
  • Shaw, Kathryn L

Abstract

Risk aversion enters many theoretical models of human capital investment, but attitudes toward risk have not been incorporated in empirical models of human capital investment. This article develops a model of the joint investment in financial wealth and human wealth to show that human capital investment is an inverse function of the degree of relative risk aversion. Using data from the Survey of Consumer Finances, the author finds that wage growth is positively correlated with preferences for risk taking. More educated individuals are also more likely to be risktakers, thus risk taking explains a portion of the returns to education. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 626-653, October.
  • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:4:p:626-53
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/209825
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JOLE for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Williams, Joseph T, 1979. "Uncertainty and the Accumulation of Human Capital over the Life Cycle," The Journal of Business, University of Chicago Press, vol. 52(4), pages 521-548, October.
    2. Friend, Irwin & Blume, Marshall E, 1975. "The Demand for Risky Assets," American Economic Review, American Economic Association, vol. 65(5), pages 900-922, December.
    3. Kathryn L. Shaw, 1984. "A Formulation of the Earnings Function Using the Concept of Occupational Investment," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 319-340.
    4. N/A, 1971. "The Economic Situation," National Institute Economic Review, National Institute of Economic and Social Research, vol. 56(1), pages 22-35, May.
    5. Hause, John C, 1974. "The Risk Element in Occupational and Educational Choices: Comment," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 803-807, July/Aug..
    6. Liberman, Joseph, 1980. "Human Capital and the Financial Capital Market," The Journal of Business, University of Chicago Press, vol. 53(2), pages 165-191, April.
    7. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-229, April.
    8. Brown, James N & Rosen, Harvey S, 1987. "Taxation, Wage Variation, and Job Choice," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 430-451, October.
    9. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-176, February.
    10. anonymous, 1971. "Monetary aggregates and recent economic trends," Review, Federal Reserve Bank of St. Louis, issue Apr, pages 2-9.
    11. anonymous, 1971. "The economy: a moderate recovery," Review, Federal Reserve Bank of St. Louis, issue May, pages 2-7.
    12. N/A, 1971. "Chapter II. The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 58(1), pages 16-33, November.
    13. N/A, 1971. "The Economic Situation: Chapter I. the Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 58(1), pages 4-15, November.
    14. N/A, 1971. "Chapter II: The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 57(1), pages 21-34, August.
    15. Fama, Eugene F & French, Kenneth R, 1988. "Permanent and Temporary Components of Stock Prices," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 246-273, April.
    16. Weiss, Yoram, 1972. "The Risk Element in Occupational and Educational Choices," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1203-1213, Nov.-Dec..
    17. Schwartz, Aba, 1976. "Migration, Age, and Education," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 701-719, August.
    18. Griliches, Zvi, 1974. "Errors in Variables and Other Unobservables," Econometrica, Econometric Society, vol. 42(6), pages 971-998, November.
    19. N/A, 1971. "The Economic Situation," National Institute Economic Review, National Institute of Economic and Social Research, vol. 56(1), pages 4-21, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. An Empirical Analysis of Risk Aversion and Income Growth (JLE 1996) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:14:y:1996:i:4:p:626-53. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division). General contact details of provider: http://www.journals.uchicago.edu/JOLE/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.