Wage Risk, Employment Risk and the Rise in Wage Inequality

Ariel Mecikovsky () and Felix Wellschmied
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Ariel Mecikovsky: University of Bonn

No 10451, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate the changes in US male labor market risk over the last three decades in a model of endogenous labor supply and job mobility. Across education groups permanent shocks to productivity have become more dispersed. Moreover, heterogeneity in pay across offered jobs has increased for workers with at least some college education. Simulating these changes in a life-cycle model with search frictions, we show that the estimated changes in risk can account for 85 percent of the increase in within group wage inequality. The welfare costs of rising risk are small.

Keywords: wage risk; secular trends; insurance (search for similar items in EconPapers)
JEL-codes: D91 J11 J22 J31 J64 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2016-12
New Economics Papers: this item is included in nep-dge and nep-ltv
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Wage Risk, Employment Risk, and the Rise in Wage Inequality (2018)
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