Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73814
Authors: 
Arent, Stefan
Nagl, Wolfgang
Year of Publication: 
2011
Series/Report no.: 
Ifo Working Paper 100
Abstract: 
We examine the impact of lay-off risks on wages. Portfolio as well as search theoreticmodelling predicts higher exogenous lay-off risks to go along with higher wages. But,an impact of wages on lay-off risks (e.g., endogenous job destruction) is also plausible.Using the German BA Employment Panel (2008), we estimate a wage equation withexogenous lay-off risks for the most important industries in West Germany. We addressthe mutual causality by controlling for endogeneity via an instrumental variableapproach. Furthermore, we restrict our analysis to the high skilled to avoid a highimpact on tariff commitment. Our findings suggest the presence of risk premiums inthree of five industries. The level of impact and its significance depends on the industryand on the gender of the employee.
Subjects: 
Lay-off risk
wages
JEL: 
I31
J63
Document Type: 
Working Paper

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