Firm Performance and the Volatility of Worker Earnings

Chinhui Juhn (), Kristin McCue, Holly Monti and Brooks Pierce

No 23102, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using linked employer-employee data for the U.S., we examine whether shocks to firm revenues are transmitted to the earnings of continuing employees. While full insurance is rejected, the elasticity of worker earnings with respect to persistent shocks in firm revenues is small and consistent with the notion that firms insulate workers from idiosyncratic shocks. Exploring heterogeneity of effects, we find the largest elasticity in professional services, among employees in the top 5% of their employers’ earnings distribution, suggesting that in certain jobs performance pay may be a countervailing force to wage insurance.

JEL-codes: J01 J3 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-hrm and nep-lab
Note: EFG LS PR
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Published as Firm Performance and the Volatility of Worker Earnings , Chinhui Juhn, Kristin McCue, Holly Monti, Brooks Pierce. in Firms and the Distribution of Income: The Roles of Productivity and Luck , Lazear and Shaw. 2018
Published as Chinhui Juhn & Kristin McCue & Holly Monti & Brooks Pierce, 2018. "Firm Performance and the Volatility of Worker Earnings," Journal of Labor Economics, vol 36(S1), pages S99-S131.

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Chapter: Firm Performance and the Volatility of Worker Earnings (2015)
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