IDEAS home Printed from https://ideas.repec.org/p/fth/yalegr/730.html

Labor Income Indices Designed for Use in Contracts Promoting Income Risk Management

Author

Listed:
  • Shiller, R.J.
  • Schneider, R.

Abstract

We propose that labor income indices be used to define settlements in many contracts, such as labor contracts, indexed bonds, or income securities. We discuss the issues in producing labor income indices for such uses, and develop prototype indices using US. data from the Panel Study of Income Dynamics (PSID). People are grouped by a clustering algorithm based on an estimated transition matrix between jobs, by education level, and by skill category. The groupings are defined so that few people move between them. For each grouping we generate a labor income index (1968–87) using a hedonic repeated‐measures regression method. The indices show substantial variability through time, confirming the potential importance of the use of such indices in contracts. There is also substantial variability across groupings, as for example between the agriculture/labor grouping and other groupings, confirming the importance of using the grouping indices rather than aggregate indices in contracts.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Shiller, R.J. & Schneider, R., 1995. "Labor Income Indices Designed for Use in Contracts Promoting Income Risk Management," Papers 730, Yale - Economic Growth Center.
    • Handle: RePEc:fth:yalegr:730
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert J. Shiller, 2006. "Designing Indexed Units of Account," Chapters, in: Lawrence R. Klein (ed.), Long-run Growth and Short-run Stabilization, chapter 11, Edward Elgar Publishing.
    2. Madeira, Carlos, 2019. "Measuring the covariance risk of consumer debt portfolios," Journal of Economic Dynamics and Control, Elsevier, vol. 104(C), pages 21-38.
    3. Robert J. Shiller, 1997. "Public Resistance to Indexation: A Puzzle," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 159-228.
    4. Robert J. Shiller, 2014. "Speculative Asset Prices (Nobel Prize Lecture)," Cowles Foundation Discussion Papers 1936, Cowles Foundation for Research in Economics, Yale University.
    5. Rainer Schulz & Martin Wersing & Axel Werwatz, 2014. "Renting versus Owning and the Role of Human Capital: Evidence from Germany," The Journal of Real Estate Finance and Economics, Springer, vol. 48(4), pages 754-788, May.
    6. Robert J. Shiller, 1997. "Expanding the Scope of Individual Risk Management: Moral Hazard and Other Behavioral Considerations," Cowles Foundation Discussion Papers 1145, Cowles Foundation for Research in Economics, Yale University.
    7. Mario Sarcinelli, 2003. "Crisi economiche e mercati finanziari: di aiuto un nuovo ordine finanziario?," Moneta e Credito, Economia civile, vol. 56(224), pages 387-422.
    8. Robert J. Shiller, 2014. "Speculative Asset Prices," American Economic Review, American Economic Association, vol. 104(6), pages 1486-1517, June.
    9. Robert Hahn & Paul Tetlock, 2006. "A New Approach for Regulating Information Markets," Journal of Regulatory Economics, Springer, vol. 29(3), pages 265-281, May.
    10. Shiller, Robert J., 2017. "Economic risks associated with deep change in technology, and their mitigation," Journal of Policy Modeling, Elsevier, vol. 39(4), pages 616-624.
    11. Andreas Fuster & Paul S. Willen, 2011. "Insuring Consumption Using Income-Linked Assets," Review of Finance, European Finance Association, vol. 15(4), pages 835-873.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    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:fth:yalegr:730. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Krichel (email available below). General contact details of provider: https://edirc.repec.org/data/egyalus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.