Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/197214
Authors: 
Kerndler, Martin
Year of Publication: 
2019
Series/Report no.: 
ECON WPS No. 04/2019
Abstract: 
Firms provide substantial insurance against wage fl uctuations and job loss. This paper studies how the interaction between shock size and persistence affects the firm's ability to insure workers against idiosyncratic firm-level shocks. Using linked employer-employee data from Germany, I find that wages respond largely symmetrically to positive and negative permanent shocks. Whereas transitory shocks lead to upward wage rigidity. Individual layoff probabilities only increase in response to negative permanent shocks. Interestingly, wage cuts and job loss after negative shocks are limited to blue-collar workers. Whereas white-collar workers are fully insured against negative shocks both in terms of wages and employment.
Subjects: 
wage insurance
layoffs
linked employer-employee data
Kalman filter
JEL: 
C33
D22
J33
J41
Document Type: 
Working Paper

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