Cross-sectional earnings risk and occupational sorting: The role of risk attitudes
Journal
Labour Economics
ISSN
0927-5371
ISSN-Digital
1879-1034
Type
journal article
Date Issued
2007-12-01
Author(s)
Bonin, Holger
;
Dohmen, Thomas
;
Falk, Armin
;
Huffman, David
;
Sunde, Uwe
Abstract
This paper investigates to what extent individuals' risk preferences are correlated with the cross-sectional earnings risk of their occupation. We exploit data from the German Socio-Economic Panel, which contains a direct survey question about willingness to take risks that has been shown to be a behaviorally valid measure of risk aversion. As a measure of earnings risk, we use the cross-sectional variation in earnings that is left unexplained by human capital variables in Mincerian wage regressions. Our evidence shows that individuals with low willingness to take risks are more likely to work in occupations with low earnings risk. This pattern is found regardless of the level of occupation categories, region, gender and labor market experience.
Language
English
Keywords
Occupational choice
Sorting
Risk preferences
SOEP
Earnings risk
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
14
Number
6
Start page
926
End page
937
Pages
12
Subject(s)
Division(s)
Eprints ID
43901