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An Empirical Note on the Relationship between Unemployment and Risk-Aversion

Author

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  • Luis Diaz-Serrano

    (National University of Ireland Maynooth, Department of Economics)

  • Donal O'Neill

    (National University of Ireland Maynooth, Department of Economics)

Abstract

In this paper we use a direct measure of individual risk-aversion to examine the relationship between risk-aversion and unemployment. Contrary to what the simple search model predicts, we observe that more risk-averse individuals are more likely to be unemployed. We present extensions of the search model that can reconcile the theory with the relationships observed in the data.

Suggested Citation

  • Luis Diaz-Serrano & Donal O'Neill, 2004. "An Empirical Note on the Relationship between Unemployment and Risk-Aversion," Economics Department Working Paper Series n1360804, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n1360804
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    File URL: http://repec.maynoothuniversity.ie/mayecw-files/N1360804.pdf
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    References listed on IDEAS

    as
    1. Luigi Guiso & Monica Paiella, 2008. "Risk Aversion, Wealth, and Background Risk," Journal of the European Economic Association, MIT Press, vol. 6(6), pages 1109-1150, December.
    2. Feinberg, Robert M, 1977. "Risk Aversion, Risk, and the Duration of Unemployment," The Review of Economics and Statistics, MIT Press, vol. 59(3), pages 264-271, August.
    3. Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 626-653, October.
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    Cited by:

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    3. Jaime Ruiz-Tagle V. & Pablo Tapia G., 2012. "Brechas por Género en Aversión al Riesgo," Working Papers wp373, University of Chile, Department of Economics.

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    More about this item

    Keywords

    Unemployment; job-search; risk-aversion;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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