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Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs

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  • Moretti, Enrico

Abstract

Due to unique institutional and technological factors, seasonal agricultural jobs are characterized by much higher risk of unemployment than similar permanent jobs. I estimate compensating differentials for risk of unemployment and compare those with unemployment insurance benefits provided by the government. I use two sets of estimators. First, I calculate parametric estimates with Heckman correction. Second, I compute three versions of a distribution-free semiparametric estimator which is robust to misspecification of the residual distribution. The main finding of the paper is that there exists a positive compensating differential of 15.5 percent of the average wage. This corresponds to an implicit replacement rate significantly larger than the typical unemployment benefit. Copyright 2000 by Kluwer Academic Publishers

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  • Moretti, Enrico, 2000. "Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs," Journal of Risk and Uncertainty, Springer, vol. 20(1), pages 45-66, January.
    • Handle: RePEc:kap:jrisku:v:20:y:2000:i:1:p:45-66
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