Better safe than sorry? The effects of income risk, unemployment risk and the interaction of these risks on wages
We examine whether income and unemployment risks are compensated by individual wages. Using a portfolio approach we show that the marginal income risk effect on wages is always positive whereas the marginal unemployment risk effect crucially depends on the income risk. The interaction effect between both risk measures is negative. Using administrative panel data from Germany we confirm the theoretically predicted signs for both risks and their interaction effect.
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- Luis Diaz-Serrano & Joop Hartog & Helena Skyt Nielsen, 2008.
"Compensating Wage Differentials for Schooling Risk in Denmark,"
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- Diaz-Serrano, L. & Hartog, J. & Skyt Nielsen, H., 2003. "Compensating Wage Differentials for Schooling Risk in Denmark," Economics, Finance and Accounting Department Working Paper Series n1271003, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
- Diaz-Serrano, Luis & Hartog, Joop & Nielsen, Helena Skyt, 2003. "Compensating Wage Differentials for Schooling Risk in Denmark," IZA Discussion Papers 963, Institute for the Study of Labor (IZA).
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- repec:iab:iabzaf:v:43:i:2:p:125-143 is not listed on IDEAS
- Joop Hartog & Erik Plug & Luis Diaz Serrano & Jose Vieira, 2003. "Risk compensation in wages – a replication," Empirical Economics, Springer, vol. 28(3), pages 639-647, July.
- Smolny Werner, 2009. "Wage Adjustment, Competitiveness and Unemployment – East Germany after Unification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 130-145, April.
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- Allan G. King, 1974. "Occupational Choice, Risk Aversion, and Wealth," ILR Review, Cornell University, ILR School, vol. 27(4), pages 586-596, July. Full references (including those not matched with items on IDEAS)
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