On compensation for risk aversion and skewness affection in wages

Hartog, Joop; Vijverberg, Wim P. M.

doi:10.1016/j.labeco.2007.08.002

Cited by 70 publications

(128 citation statements)

References 24 publications

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“…This dispersion is taken from the wage regressions with data from the Current Population Survey in Hartog and Vijverberg (2007); the mean just matches quite nicely with our simulations. We let σ ln ε vary between 1.15 and 1.35, implying V [ε] ranges from 10.33 to 32.10.…”

Section: Differences In Abilitysupporting

confidence: 72%

“…In these models, individual wages are regressed on measures of income risk, typically the residual variance of wages, within occupations or educations (King 1974;McGoldrick 1995;McGoldrick and Robst 1996;Feinberg 1981). A series of recent papers confirms the basic finding that wages are higher in occupations/educations where the variance of wages is greater Hartog and Vijverberg 2007;Diaz Serrano et al 2003;Diaz Serrano and Hartog 2006;Christiansen and Nielsen 2002).…”

Section: Introductionmentioning

confidence: 94%

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Self-selection bias in estimated wage premiums for earnings risk

Jacobs

Hartog

Vijverberg³

2008

Empir Econ

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This note develops a simple occupational choice model to examine three types of selection biases that may occur in empirically estimating the premium for uncertain wages. Individuals may select themselves into risky (wage-uncertain) jobs because they have (1) lower risk aversion, or (2) lower income risks, or (3) higher individual ability. We show that (1) gives no bias, (2) biases the OLS estimate of the risk-premium in a wage regression upward, and (3) yields a bias that analytically may be positive or negative, but empirically is more likely to be negative if our occupational choice model is correct.

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Section: Differences In Abilitysupporting

confidence: 72%

Section: Introductionmentioning

confidence: 94%

Self-selection bias in estimated wage premiums for earnings risk

Jacobs

Hartog

Vijverberg³

2008

Empir Econ

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“…In the literature (see Hartog and Vijverberg 2007 for an application), risk r i has been measured 12 Not surprisingly, the differences between the scenarios are smaller if one considers the variance coefficient based on a variable wage interval around the median (see descriptives in the Appendix). The risk in scenario 30/secondary education appears higher then, whereas it appears lower in scenario 40/tertiary education.…”

Section: Core Resultsmentioning

confidence: 99%

Do students expect compensation for wage risk?

Schweri

Hartog

Wolter

2011

Economics of Education Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Do Students Expect Compensation for Wage Risk?Juerg Schweri Joop Hartog Stefan C. Wolter The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Do Students Expect Compensation for Wage Risk? *We use a unique data set about the wage distribution that Swiss students expect for themselves ex ante, deriving parametric and non-parametric measures to capture expected wage risk. These wage risk measures are unfettered by heterogeneity which handicapped the use of actual market wage dispersion as risk measure in earlier studies. Students in our sample anticipate that the market provides compensation for risk, as has been established with Risk Augmented Mincer earnings equations estimated on market data: higher wage risk for educational groups is associated with higher mean wages. With observations on risk as expected by students we find compensation at similar elasticities as observed in market data. The results are robust to different specifications and estimation models.JEL Classification: D8, I2, J2, J3

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“…However, their specification of the uniquenesses or innovations is more general than that used in factor analysis. The analysis of Hartog and Vijverberg (2002) is another example and uses variances of ex post income to proxy ex ante variability, removing "fixed effects" (person specific θ). ences and imperfect market environments.…”

Section: An Approach Based On Factor Structuresmentioning

confidence: 99%

Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling

2007

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This paper surveys a recent body of research by Heckman (2001, 2003), ), Cunha, Heckman, and Navarro (2005a,b, 2006, Heckman and Navarro (2006) and Navarro (2004) that estimates and identifies the ex post distribution of returns to schooling and determines ex ante distributions of returns on which agents base their schooling choices. We discuss methods and evidence, and state a fundamental identification problem concerning the separation of preferences, market structures and agent information sets. For a variety of market structures and preference specifications, we estimate that over 50% of the ex post variance in returns to college are forecastable at the time agents make their schooling choices.JEL Code: C31

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On compensation for risk aversion and skewness affection in wages

Cited by 70 publications

References 24 publications

Self-selection bias in estimated wage premiums for earnings risk

Self-selection bias in estimated wage premiums for earnings risk

Do students expect compensation for wage risk?

Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling

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