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Wage risk and the skill premium
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SYSNO ASEP 0559243 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Wage risk and the skill premium Author(s) Slavík, Ctirad (NHU-C) ORCID
Yazici, H. (TR)Source Title Economic Journal. - : Oxford University Press - ISSN 0013-0133
Roč. 132, č. 646 (2022), s. 2207-2230Number of pages 24 s. Language eng - English Country GB - United Kingdom Keywords skill premium ; wage risk ; capital-skill complementarity Subject RIV AH - Economics OECD category Applied Economics, Econometrics R&D Projects GA17-27676S GA ČR - Czech Science Foundation (CSF) Method of publishing Limited access Institutional support NHU-C - Cooperatio-COOP UT WOS 000787430200001 EID SCOPUS 85143176078 DOI https://doi.org/10.1093/ej/ueac015 Annotation The skill premium has increased significantly in the United States in the last five decades. During the same period, individual wage risk has also increased. This paper proposes a mechanism through which a rise in wage risk increases the skill premium. Intuitively, a rise in uninsured wage risk increases precautionary savings, thereby boosting capital accumulation, which increases the skill premium due to capital-skill complementarity. Using a quantitative macroeconomic model, we find that the rise in wage risk observed between 1967 and 2010 increases the skill premium significantly. This finding is robust across a variety of model specifications. Workplace NHU-C Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2023 Electronic address https://doi.org/10.1093/ej/ueac015
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