Labor Income Indices Designed for Use in Contracts Promoting Income Risk Management
Labor income indices are created for groupings of individuals, using data from the Panel Study of Income Dynamics. People are grouped by a clustering algorithm based on an estimated transition matrix between jobs, by education level, and by skill category. The groups are defined so that relatively few people move between them. For each of the groupings, we generate a labor income index using a hedonic repeated-measures regression methodology. Similarities between pairs of indices and between indices and individual labor incomes are described. It is argued that indices like those presented here might someday be used in settlement formulae in contracts promoting income risk management.
|Date of creation:||Aug 1995|
|Date of revision:|
|Publication status:||Published in Review of Income and Wealth (1998), 44(2): 163-182|
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- Robert J. Shiller, 1992.
"Measuring Asset Values for Cash Settlement in Derivative Markets: Hedonic Repeated Measures Indices and Perpetual Futures,"
Cowles Foundation Discussion Papers
1036, Cowles Foundation for Research in Economics, Yale University.
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- Robert J. Shiller, 1993. "Measuring Asset Values for Cash Settlement in Derivative Markets: Hedonic Repeated Measures indices and Perpetual Futures," NBER Technical Working Papers 0131, National Bureau of Economic Research, Inc.
- Robert J. Shiller & Stefano Athanasoulis, 1995.
"World Income Components: Measuring and Exploiting International Risk Sharing Opportunities,"
NBER Working Papers
5095, National Bureau of Economic Research, Inc.
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- Robert J. Shiller & Stefano G. Athanasoulis, 1997. "World Income Components: Measuring and Exploiting International Risk Sharing Opportunities," Cowles Foundation Discussion Papers 1097, Cowles Foundation for Research in Economics, Yale University.
- Robert Shiller, 2004. "World Income Components: Measuring And Exploiting International Risk Sharing Opportunities," Yale School of Management Working Papers ysm151, Yale School of Management.
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- Cargill, Thomas F, 1969. "An Empirical Investigation of the Wage-Lag Hypothesis," American Economic Review, American Economic Association, vol. 59(5), pages 806-16, December.
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