Wage Risk, Employment Risk and the Rise in Wage Inequality

We specify a life-cycle model of consumption, labor supply and job mobility in an economy with search frictions. We distinguish different sources of risk, including shocks to productivity, job arrival, and job destruction. Allowing for job mobility has a large effect on the estimate of productivity risk. Increases in the latter impose a considerable welfare loss. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of programs such as Food Stamps, partially insuring productivity risk, is greater than the value of unemployment insurance which provides (partial) insurance against employment risk. (JEL D91, J22, J31, J61, J64, J65)

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Wage Risk and Employment Risk over the Life Cycle

10.3386/w14901 ◽

2009 ◽

Cited By ~ 15

Author(s):

Hamish Low ◽

Costas Meghir ◽

Luigi Pistaferri

Keyword(s):

Life Cycle ◽

Wage Risk ◽

Employment Risk

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Econometric Analysis of Returns to Education of Rural and Urban Labour Markets Workers in Tamil Nadu

Indian Journal of Economics and Development ◽

10.35716/ijed/20023 ◽

2020 ◽

pp. 336-344

Keyword(s):

Wage Inequality ◽

Tamil Nadu ◽

Returns To Education ◽

Labour Markets ◽

Wage Distribution ◽

Rural Market ◽

Rural And Urban ◽

Rate Of Returns ◽

Education Groups ◽

Quantile Regression Method

The objective of this study was to empirically evaluate the returns to education of rural and urban labour markets workers in Tamil Nadu using the IHDS data with appropriate Econometric models. First, the present study estimated the earning functions of the rural and urban market's workers by OLS technique and standard Mincerian earning functions. Secondly, the quantile regression method was also used to examine the evolution of wage inequality. The findings of the study showed that the effects of education and experience on the log of hourly wages were positive, and these coefficients were statistically significant. The returns to education increased with the level of education and differed among the workers of rural and urban labour markets. The results showed that the rates of returns to primary, middle and higher secondary were higher in the urban market, whereas those of secondary and graduation were higher in the rural market. The study revealed that the effect of education was not the same across the rural and urban wage distribution. The rate of returns differed considerably within education groups across different quantiles of the wage distribution.

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