Better Safe than Sorry? The Effects of Income Risk, Unemployment Risk and the Interaction of these Risks on Wages

Nagl, Wolfgang (2012) Better Safe than Sorry? The Effects of Income Risk, Unemployment Risk and the Interaction of these Risks on Wages. Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Ifo Working Papers No. 148. , 24 p.

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Abstract or Table of Contents

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.

Item Type: Discussion/ Working Paper (Unspecified)
Keywords: income risk, unemployment risk, interaction effect, wages
Classification Codes (e.g. JEL): JEL Classification: J30, J31, J64
Status: Published
Related URLs:
Date Deposited: 23 Nov 2015 10:35
Last Modified: 01 Apr 2016 14:20
URI: http://irihs.ihs.ac.at/id/eprint/3802

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