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Wage Risk, Employment Risk and the Rise in Wage Inequality

Listed author(s):
  • Mecikovsky, Ariel

    ()

    (University of Bonn)

  • Wellschmied, Felix

    ()

    (Universidad Carlos III de Madrid)

Registered author(s):

    We estimate the changes in US male labor market risk over the last three decades in a model of endogenous labor supply and job mobility. Across education groups permanent shocks to productivity have become more dispersed. Moreover, heterogeneity in pay across offered jobs has increased for workers with at least some college education. Simulating these changes in a life-cycle model with search frictions, we show that the estimated changes in risk can account for 85 percent of the increase in within group wage inequality. The welfare costs of rising risk are small.

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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10451.

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    Length: 51 pages
    Date of creation: Dec 2016
    Handle: RePEc:iza:izadps:dp10451
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    1. David G. Blanchflower & Andrew J. Oswald, 2013. "Does High Home-Ownership Impair the Labor Market?," NBER Working Papers 19079, National Bureau of Economic Research, Inc.
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    12. Yonatan Ben-Shalom & Robert A. Moffitt & John Karl Scholz, 2011. "An Assessment of the Effectiveness of Anti-Poverty Programs in the United States," NBER Working Papers 17042, National Bureau of Economic Research, Inc.
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