Wage Risk and the Value of Job Mobility in Early Employment Careers

Kai Liu

No 9256, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper shows that job mobility is a valuable channel which employed workers use to mitigate bad labor market shocks. I construct and estimate a model of wage dynamics jointly with a dynamic model of job mobility. The key feature of the model is the specification of wage shocks at the worker- firm match level, for workers can respond to these shocks by changing jobs. The model is estimated using a sample of young male workers from the 1996 panel of Survey of Income and Program Participation. The first result is that the variance of match-level shocks is large, and the consequent value of job mobility is substantial. The second result is that true wage risk is almost three times as large as the wage variance observed after job mobility, which is what other papers in the literature have called wage risk. This suggests a very different picture of the risks facing employed workers in the labor market.

Keywords: wage risk; wage dynamics; job mobility; employment (search for similar items in EconPapers)
JEL-codes: D91 J31 J62 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2015-08
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Journal of Labor Economics, 2019, 37 (1), 139 - 185

Downloads: (external link)
https://docs.iza.org/dp9256.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9256

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().