Robust Estimation of Wage Dispersion with Censored Data: An Application to Occupational Earnings Risk and Risk Attitudes

Daniel Pollmann; Thomas Dohmen; Franz Palm

doi:10.1007/s10645-020-09374-x

Robust Estimation of Wage Dispersion with Censored Data: An Application to Occupational Earnings Risk and Risk Attitudes

Daniel Pollmann, Thomas Dohmen^*, Franz Palm

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

We present a semiparametric method to estimate group-level dispersion, which is particularly effective in the presence of censored data. We apply this procedure to obtain measures of occupation-specific wage dispersion using top-coded administrative wage data from the German IAB Employment Sample. We then relate these robust measures of earnings risk to the risk attitudes of individuals working in these occupations. We find that willingness to take risk is positively correlated with the wage dispersion of an individual's occupation.

Original language	English
Pages (from-to)	519-540
Number of pages	22
Journal	De Economist
Volume	168
Issue number	4
Early online date	17 Sept 2020
DOIs	https://doi.org/10.1007/s10645-020-09374-x
Publication status	Published - Dec 2020

JEL classifications

c14 - Semiparametric and Nonparametric Methods: General
c21 - "Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions"
c24 - "Single Equation Models; Single Variables: Truncated and Censored Models; Switching Regression Models"
j24 - "Human Capital; Skills; Occupational Choice; Labor Productivity"
j31 - "Wage Level and Structure; Wage Differentials"
d01 - Microeconomic Behavior: Underlying Principles
d81 - Criteria for Decision-Making under Risk and Uncertainty

Keywords

Dispersion estimation
Earnings risk
Censoring
Quantile regression
Occupational choice
Sorting
Risk preferences
SOEP
IABS
QUANTILE REGRESSION
SAMPLE SELECTION
2-STEP ESTIMATION
TOBIT ESTIMATOR
AVERSION
MODELS
TESTS
MISSPECIFICATION
DETERMINANTS
INEQUALITY

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10.1007/s10645-020-09374-xLicence: CC BY

Cite this

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title = "Robust Estimation of Wage Dispersion with Censored Data: An Application to Occupational Earnings Risk and Risk Attitudes",

abstract = "We present a semiparametric method to estimate group-level dispersion, which is particularly effective in the presence of censored data. We apply this procedure to obtain measures of occupation-specific wage dispersion using top-coded administrative wage data from the German IAB Employment Sample. We then relate these robust measures of earnings risk to the risk attitudes of individuals working in these occupations. We find that willingness to take risk is positively correlated with the wage dispersion of an individual's occupation.",

keywords = "Dispersion estimation, Earnings risk, Censoring, Quantile regression, Occupational choice, Sorting, Risk preferences, SOEP, IABS, QUANTILE REGRESSION, SAMPLE SELECTION, 2-STEP ESTIMATION, TOBIT ESTIMATOR, AVERSION, MODELS, TESTS, MISSPECIFICATION, DETERMINANTS, INEQUALITY",

author = "Daniel Pollmann and Thomas Dohmen and Franz Palm",

note = "data source: German Socio-Economic Panel Study (SOEP) and IAB Employment Sample (IABS)",

year = "2020",

month = dec,

doi = "10.1007/s10645-020-09374-x",

language = "English",

volume = "168",

pages = "519--540",

journal = "De Economist",

issn = "0013-063X",

publisher = "Springer",

number = "4",

}

TY - JOUR

T1 - Robust Estimation of Wage Dispersion with Censored Data

T2 - An Application to Occupational Earnings Risk and Risk Attitudes

AU - Pollmann, Daniel

AU - Dohmen, Thomas

AU - Palm, Franz

N1 - data source: German Socio-Economic Panel Study (SOEP) and IAB Employment Sample (IABS)

PY - 2020/12

Y1 - 2020/12

N2 - We present a semiparametric method to estimate group-level dispersion, which is particularly effective in the presence of censored data. We apply this procedure to obtain measures of occupation-specific wage dispersion using top-coded administrative wage data from the German IAB Employment Sample. We then relate these robust measures of earnings risk to the risk attitudes of individuals working in these occupations. We find that willingness to take risk is positively correlated with the wage dispersion of an individual's occupation.

AB - We present a semiparametric method to estimate group-level dispersion, which is particularly effective in the presence of censored data. We apply this procedure to obtain measures of occupation-specific wage dispersion using top-coded administrative wage data from the German IAB Employment Sample. We then relate these robust measures of earnings risk to the risk attitudes of individuals working in these occupations. We find that willingness to take risk is positively correlated with the wage dispersion of an individual's occupation.

KW - Dispersion estimation

KW - Earnings risk

KW - Censoring

KW - Quantile regression

KW - Occupational choice

KW - Sorting

KW - Risk preferences

KW - SOEP

KW - IABS

KW - QUANTILE REGRESSION

KW - SAMPLE SELECTION

KW - 2-STEP ESTIMATION

KW - TOBIT ESTIMATOR

KW - AVERSION

KW - MODELS

KW - TESTS

KW - MISSPECIFICATION

KW - DETERMINANTS

KW - INEQUALITY

U2 - 10.1007/s10645-020-09374-x

DO - 10.1007/s10645-020-09374-x

M3 - Article

SN - 0013-063X

VL - 168

SP - 519

EP - 540

JO - De Economist

JF - De Economist

IS - 4

ER -

Robust Estimation of Wage Dispersion with Censored Data: An Application to Occupational Earnings Risk and Risk Attitudes

Abstract

JEL classifications

Keywords

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