The Job Ladder and its Implications for Earnings Risk

Joachim Hubmer ()

No 162, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: This paper analyzes the ability of a job ladder framework to explain recent evidence on earnings risk. Heterogeneous and risk averse workers search for job opportunities at heterogeneous firms. The resulting dynamics can successfully replicate several non-targeted key properties of the distribution of earnings changes that have been documented by Guvenen, Karahan, Ozkan and Song [2015]. These are most notably a large negative skewness and a high excess kurtosis, rejecting the frequently used log-normal framework. Moreover, the proposed model is to a certain extent successful in explaining variation in these moments as a function of age and the level of earnings.

Date: 2016
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Journal Article: The Job Ladder and its Implications for Earnings Risk (2018)
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