Risk Sharing in Labour Markets

Arbeitspapier

Empirical work in labour economics has focused on rent sharing as an explanation for the observed correlation in cross-sections between wages and profitability. The alternative explanation of risk sharing between workers and employers has not been tested. Using a unique panel data set for four African countries we find strong evidence of risk sharing. Workers in effect offer insurance to employers: when firms are hit by temporary shocks the effect on profits is cushioned by risk sharing with workers. Rent sharing is a symptom of an inefficient labor market. Risk sharing, however, can be seen as an efficient response to missing markets. Our evidence suggests that risk sharing accounts for a substantial part of the observed effect of shocks on wages.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 03-077/2

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Microeconomic Analyses of Economic Development
• Subject: Risk sharing ; labor markets ; rent sharing ; insurance ; Arbeitsmarkttheorie ; Risiko ; Ghana ; Kamerun ; Kenia ; Simbabwe

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bigsten, Arne ; Collier, Paul ; Dercon, Stefan ; Fafchamps, Marcel ; Gunning, Jan Willem ; Oduro, Abena ; Oostendorp, Remco ; Pattillo, Cathy ; Söderbom, Mans ; Teal, Francis ; Zeufack, Albert
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/86106
• Last update: 10.03.2025, 11:42 AM CET