Cross-sectional earnings risk and occupational sorting: The role of risk attitudes

Holger Bonin (), Thomas Dohmen, Armin Falk, David Huffman and Uwe Sunde

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This paper investigates to what extent individuals’ risk preferences are correlated with the cross-sectional earnings risk of their occupation. We exploit data from the German Socio-Economic Panel, which contains a direct survey question about willingness to take risks that has been shown to be a behaviorally valid measure of risk aversion. As a measure of earnings risk, we use the cross-sectional variation in earnings that is left unexplained by human capital variables in Mincerian wage regressions. Our evidence shows that individuals with low willingness to take risks are more likely to work in occupations with low earnings risk. This pattern is found regardless of the level of occupation categories, region, gender and labor market experience.

Date: 2007
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Published in Labour Economics 6 14(2007): pp. 926-937

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Related works:
Journal Article: Cross-sectional earnings risk and occupational sorting: The role of risk attitudes (2007)
Working Paper: Cross-sectional Earnings Risk and Occupational Sorting: The Role of Risk Attitudes (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:20204

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