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Earnings and labour market volatility in Britain, with a transatlantic comparison

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  • Cappellari, Lorenzo
  • Jenkins, Stephen P.

Abstract

We contribute new evidence about earnings and labour market volatility in Britain over the period 1992–2008, for women as well as men, and provide transatlantic comparisons (Most research about volatility refers to earnings volatility for US men.). Earnings volatility declined slightly for both men and women over the period but the changes are not statistically significant. When we look at labour market volatility, i.e. also including individuals with zero earnings in the calculations, there is a statistically significant decline in volatility for both women and men, with the fall greater for men. Using variance decompositions, we demonstrate that the fall in labour market volatility is largely accounted for by changes in employment attachment rates. We show that volatility trends in Britain, and what contributes to them, differ from their US counterparts in several respects.

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  • Cappellari, Lorenzo & Jenkins, Stephen P., 2014. "Earnings and labour market volatility in Britain, with a transatlantic comparison," LSE Research Online Documents on Economics 57302, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:57302
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    3. Spyridon Lazarakis & James Malley & Konstantinos Angelopoulos, 2017. "Asymmetries in Earnings, Employment and Wage Risk in Great Britain," 2017 Meeting Papers 1314, Society for Economic Dynamics.
    4. Bazillier, Rémi & Héricourt, Jérôme & Ligonnière, Samuel, 2021. "Structure of income inequality and household leverage: Cross-country causal evidence," European Economic Review, Elsevier, vol. 132(C).
    5. Brian Bell & Nicholas Bloom & Jack Blundell, 2021. "This time is not so different: income dynamics during the Covid-19 recession," POID Working Papers 012, Centre for Economic Performance, LSE.
    6. El-Mallakh, Nelly & Maurel, Mathilde & Speciale, Biagio, 2018. "Arab spring protests and women's labor market outcomes: Evidence from the Egyptian revolution," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 656-682.
    7. Richard Hendra & James Riccio & Richard Dorsett & Philip Robins, 2015. "Breaking the low pay, no pay cycle: the effects of the UK Employment Retention and Advancement programme," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-32, December.
    8. Bárcena-Martín, Elena & Medina-Claros, Samuel & Pérez-Moreno, Salvador, 2020. "Gendered Effects of Employment Protection on Earnings Mobility," GLO Discussion Paper Series 547, Global Labor Organization (GLO).
    9. Brian Bell & Nicholas Bloom & Jack Blundell, 2022. "Income dynamics in the United Kingdom and the impact of the Covid‐19 recession," Quantitative Economics, Econometric Society, vol. 13(4), pages 1849-1878, November.
    10. Yanotti, Maria B. & Banks, Marcus & de Silva, Ashton & Anantharama, Nandini & Peter Whiteford, & Bowman, Dina & Csereklyei, Zsuzsanna, 2021. "The utility of new data in understanding housing insecurity," SocArXiv qb4d2, Center for Open Science.
    11. Konstantinos Angelopoulos & Spyridon Lazarakis & James Malley, 2019. "Cyclical income risk in Great Britain," Working Papers 2019-03, Business School - Economics, University of Glasgow.
    12. Rémi Bazillier & Jérôme Héricourt & Samuel Ligonnière, 2017. "Structure of Income Inequality and Household Leverage: Theory and Cross-Country Evidence," Working Papers 2017-01, CEPII research center.
    13. Sara AYLLÓN & Xavier RAMOS, 2019. "Youth earnings and labour market volatility in Europe," International Labour Review, International Labour Organization, vol. 158(1), pages 83-113, March.
    14. Angelopoulos, Konstantinos & Lazarakis, Spyridon & Malley, James, 2020. "The distributional implications of asymmetric income dynamics," European Economic Review, Elsevier, vol. 128(C).
    15. Konstantinos Angelopoulos & Spyridon Lazarakis & James Malley, 2022. "Cyclical labour income risk in Great Britain," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(1), pages 116-130, January.
    16. Marco Leonardi, 2017. "Job Mobility And Earnings Instability," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 260-280, January.
    17. Silvia Avram & Mike Brewer & Paul Fisher & Laura Fumagalli, 2022. "Household Earnings and Income Volatility in the UK, 2009–2017," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(2), pages 345-369, June.

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    More about this item

    Keywords

    earnings instability; earnings volatility; labour market volatility;
    All these keywords.

    JEL classification:

    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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