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Better Safe than Sorry? The Effects of Income Risk and Unemployment Risk on Wages
Author(s) -
Nagl Wolfgang
Publication year - 2014
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12033
Subject(s) - economics , unemployment , wage , panel data , portfolio , labour economics , point (geometry) , demographic economics , econometrics , financial economics , macroeconomics , geometry , mathematics
We study the effects of income risk and unemployment risk on individual wages simultaneously. Starting point for the empirical analysis is a portfolio model for the labor market. This model shows positive wage effects for both risks but also a negative interaction effect. Using G erman administrative panel data we estimate the effects of the income risk, the unemployment risk and their interaction on individual wages separately for men and women in E ast and W est G ermany. We find the expected positive wage effects for both risks as well as a negative interaction effect. The marginal effect of income risk on wages is positive, whereas the marginal effect of unemployment risk is negative.