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Investors' favourite - A different look at valuing individual labour income

Author

Listed:
  • Jan Voelzke
  • Jeanne Diesteldorf
  • Fabian Goessling
  • Till Weigt

Abstract

Human capital is a key economic factor in both macro- and microeconomics, and, at least for most people, by far their largest asset. Surprisingly, relatively little effort has been undertaken in the extant literature to empirically determine the value of individual human capital. This paper aims at closing the gap. We use the Substantial-Gain-Loss-Ratio to calculate Good Deal bounds for securitizations of individual labour income one year ahead. We evaluate the attractiveness of hypothetical human capital contracts using US data and can thereby identify investors' favourites.

Suggested Citation

  • Jan Voelzke & Jeanne Diesteldorf & Fabian Goessling & Till Weigt, 2017. "Investors' favourite - A different look at valuing individual labour income," CQE Working Papers 6017, Center for Quantitative Economics (CQE), University of Muenster.
    • Handle: RePEc:cqe:wpaper:6017
    as

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    File URL: https://www.wiwi.uni-muenster.de/cqe/sites/cqe/files/CQE_Paper/cqe_wp_60_2017.pdf
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    References listed on IDEAS

    as
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    4. Huggett, Mark & Kaplan, Greg, 2011. "Human capital values and returns: Bounds implied by earnings and asset returns data," Journal of Economic Theory, Elsevier, vol. 146(3), pages 897-919, May.
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    7. Koop, Gary & Korobilis, Dimitris, 2010. "Bayesian Multivariate Time Series Methods for Empirical Macroeconomics," Foundations and Trends(R) in Econometrics, now publishers, vol. 3(4), pages 267-358, July.
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    12. Ludvigson, Sydney C., 2013. "Advances in Consumption-Based Asset Pricing: Empirical Tests," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 799-906, Elsevier.
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    More about this item

    Keywords

    Human Capital Contracts; Asset Pricing; Substantial-Gain-Loss-Ratio;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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