Size and persistence matter: Wage and employment insurance at the micro level

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECON WPS ; No. 04/2019

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Firm Behavior: Empirical Analysis ; Compensation Packages; Payment Methods ; Labor Contracts
• Subject: wage insurance ; layoffs ; linked employer-employee data ; Kalman filter

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kerndler, Martin
• Event: Veröffentlichung
• (who): Vienna University of Technology, Institute of Statistics and Mathematical Methods in Economics, Research Group Economics
• (where): Vienna
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/197214
• Last update: 10.03.2025, 11:43 AM CET