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Do Students Expect Compensation for Wage Risk?

Jürg Schweri, Stefan Wolter and Joop Hartog

No 11, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: We use a unique data set about the future wage distribution that Swiss students expect for themselves ex-ante, suggesting that students use very little private information about their wage prospects. Expectations appear much more anchored to perceptions of actual contemporaneous market data. Students even 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.

Keywords: wage; expectations; wage risk; risk compensation; skewness (search for similar items in EconPapers)
JEL-codes: D8 I2 J2 J3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2008-01
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0011_lhwpaper.pdf (application/pdf)

Related works:
Journal Article: Do students expect compensation for wage risk? (2011) Downloads
Working Paper: Do Students Expect Compensation for Wage Risk? (2009) Downloads
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