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The Relationship between Unemployment and Risk-Aversion

Author

Listed:
  • Diaz-Serrano, Luis

    (Universitat Rovira i Virgili)

  • O'Neill, Donal

    (National University of Ireland, Maynooth)

Abstract

In this paper we use a direct measure of individual risk-aversion to examine the relationship between risk-aversion and unemployment. The traditional search model predicts that more risk-averse individuals have lower reservation wages and thus are less likely to be observed in unemployment. Our findings, however, do not support this prediction: on the contrary our data suggest that more risk-averse individuals are more likely to be unemployed.

Suggested Citation

  • Diaz-Serrano, Luis & O'Neill, Donal, 2004. "The Relationship between Unemployment and Risk-Aversion," IZA Discussion Papers 1214, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp1214
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    References listed on IDEAS

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    Cited by:

    1. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Discussion Papers of DIW Berlin 511, DIW Berlin, German Institute for Economic Research.
    2. Decker, Simon & Schmitz, Hendrik, 2016. "Health shocks and risk aversion," Journal of Health Economics, Elsevier, vol. 50(C), pages 156-170.
    3. Caliendo, Marco & Künn, Steffen & Weißenberger, Martin, 2016. "Personality traits and the evaluation of start-up subsidies," European Economic Review, Elsevier, vol. 86(C), pages 87-108.
    4. Song, In Jung & Park, Heejung & Park, Narang & Heo, Wookjae, 2019. "The effect of experiencing a death on life insurance ownership," Journal of Behavioral and Experimental Finance, Elsevier, vol. 22(C), pages 170-176.
    5. Foreman-Peck, James & Moore, Simon C., 2010. "Gratuitous violence and the rational offender model," International Review of Law and Economics, Elsevier, vol. 30(2), pages 160-172, June.
    6. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2012. "The Intergenerational Transmission of Risk and Trust Attitudes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 645-677.
    7. Stefano Iezzi, 2008. "Investors' risk attitude and risky behavior: a Bayesian approach with imperfect information," Temi di discussione (Economic working papers) 692, Bank of Italy, Economic Research and International Relations Area.
    8. Ondřej Dvouletý & Martin Lukeš & Mihaela Vancea, 2020. "Individual-level and family background determinants of young adults’ unemployment in Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 389-409, May.
    9. Ding, Xiaohao & Hartog, Joop & Sun, Yuze, 2010. "Can We Measure Individual Risk Attitudes in a Survey?," IZA Discussion Papers 4807, IZA Network @ LISER.
    10. Ignacio Amate-Fortes & Almudena Guarnido-Rueda & Diego Martínez-Navarro & Francisco J. Oliver-Márquez, 2021. "Measuring inequality in income distribution between men and women: what causes gender inequality in Europe?," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(2), pages 395-418, April.

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    Keywords

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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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