The Price of Security: On the Causality and Impact of Lay-off Risks on Wages
We examine the impact of lay-off risks on wages. Portfolio as well as search theoreticmodelling predicts higher exogenous lay-off risks to go along with higher wages. But,an impact of wages on lay-off risks (e.g., endogenous job destruction) is also plausible.Using the German BA Employment Panel (2008), we estimate a wage equation withexogenous lay-off risks for the most important industries in West Germany. We addressthe mutual causality by controlling for endogeneity via an instrumental variableapproach. Furthermore, we restrict our analysis to the high skilled to avoid a highimpact on tariff commitment. Our findings suggest the presence of risk premiums inthree of five industries. The level of impact and its significance depends on the industryand on the gender of the employee.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: Poschingerstr. 5, 81679 München|
Web page: http://www.cesifo-group.de
More information through EDIRC
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.:
- Bernd Fitzenberger & Reinhold Schnabel & Gaby Wunderlich, 2004.
"The gender gap in labor market participation and employment: A cohort analysis for West Germany,"
Journal of Population Economics,
Springer;European Society for Population Economics, vol. 17(1), pages 83-116, February.
- Fitzenberger, Bernd & Schnabel, Reinhold & Wunderlich, Gaby, 2001. "The gender gap in labor market participation and employment: a cohort analysis for West Germany," ZEW Discussion Papers 01-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Bas Jacobs & Joop Hartog & Wim Vijverberg, 2009. "Self-selection bias in estimated wage premiums for earnings risk," Empirical Economics, Springer, vol. 37(2), pages 271-286, October.
- Wright, Randall D, 1987. "Search, Layoffs, and Reservation Wages," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 354-65, July.
- Ernesto Villanueva, 2007. "Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany," ILR Review, Cornell University, ILR School, vol. 60(4), pages 544-561, July.
- Li, Elizabeth H, 1986. "Compensating Differentials for Cyclical and Noncyclical Unemployment: The Interaction between Investors' and Employees' Risk Aversion," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 277-300, April.
- John M. Abowd & Orley C. Ashenfelter, 1980.
"Anticipated Unemployment, Temporary Layoffs and Compensating Wage Differentials,"
517, Princeton University, Department of Economics, Industrial Relations Section..
- John M. Abowd & Orley C. Ashenfelter, 1981. "Anticipated Unemployment, Temporary Layoffs, and Compensating Wage Differentials," NBER Chapters, in: Studies in Labor Markets, pages 141-170 National Bureau of Economic Research, Inc.
- Moore, Michael J, 1995. "Unions, Employment Risks, and Market Provision of Employment Risk Differentials," Journal of Risk and Uncertainty, Springer, vol. 10(1), pages 57-70, January.
- Viscusi, W Kip, 1978. "Wealth Effects and Earnings Premiums for Job Hazards," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 408-16, August.
- Moretti, Enrico, 2000. "Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs," Journal of Risk and Uncertainty, Springer, vol. 20(1), pages 45-66, January.
- Ken Burdett & Dale T. Mortensen, 1979.
"Search, Layoffs, and Labor Market Equilibrium,"
380, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Guiso, Luigi & Jappelli, Tullio & Pistaferri, Luigi, 2002. "An Empirical Analysis of Earnings and Employment Risk," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(2), pages 241-53, April.
- Joop Hartog & Erik Plug & Luis Diaz Serrano & Jose Vieira, 2003. "Risk compensation in wages – a replication," Empirical Economics, Springer, vol. 28(3), pages 639-647, July.
- George J. Borjas & Glenn T. Sueyoshi, 1993.
"A Two-Stage Estimator for Probit Models with Structural Group Effects,"
NBER Technical Working Papers
0146, National Bureau of Economic Research, Inc.
- Borjas, George J. & Sueyoshi, Glenn T., 1994. "A two-stage estimator for probit models with structural group effects," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 165-182.
- Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
When requesting a correction, please mention this item's handle: RePEc:ces:ifowps:_100. 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: (Klaus Wohlrabe)
If references are entirely missing, you can add them using this form.