Do Students Expect Compensation for Wage Risk?

Jürg Schweri, Joop Hartog and Stefan Wolter

No 4069, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We use a unique data set about the wage distribution that Swiss students expect for themselves ex ante, deriving parametric and non-parametric measures to capture expected wage risk. These wage risk measures are unfettered by heterogeneity which handicapped the use of actual market wage dispersion as risk measure in earlier studies. Students in our sample 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: expectations; wage risk; risk compensation; wage; skewness (search for similar items in EconPapers)
JEL-codes: D8 I2 J2 J3 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-03
New Economics Papers: this item is included in nep-edu and nep-lab
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Citations: View citations in EconPapers (3)

Published - published in: Economics of Education Review, 2011, 30 (2), 215-227

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Related works:
Journal Article: Do students expect compensation for wage risk? (2011)
Working Paper: Do Students Expect Compensation for Wage Risk? (2008)
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