Full Citation

Title: Wage Risk and the Skill Premium

Citation Type: Working Paper

Publication Year: 2018

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: The skill premium has increased significantly in the United States in the last five decades. During the same period, individual wage risk has also increased. This paper proposes a mechanism through which a rise in wage risk increases the skill premium. Intuitively, a rise in uninsured wage risk increases precautionary savings, thereby boosting capital accumulation, which increases the skill premium due to capital-skill complementarity. Using a quantitative macroeconomic model, we find that the rise in wage risk observed between 1967 and 2010 increases the skill premium significantly. This finding is robust across a variety of model specifications.

Url: http://ademu-project.eu/wp-content/uploads/2018/03/0088-Wage-Risk-and-the-Skill-Premium.pdf

User Submitted?: No

Authors: Slavik, Ctirad; Yazici, Hakki

Series Title: ADEMU Working Paper Series

Publication Number: 2017/088

Institution: A Dynamic Economic and Monetary Union

Pages: 49

Publisher Location:

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: