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Moderation in Higher-Order Earnings Risk? Evidence from German Cohorts

Author

Listed:
  • Isaak, Niklas

    (RWI)

  • Jessen, Robin

    (RWI)

Abstract

Women born later experience greater earnings growth volatility at given ages than older cohorts. This implies a welfare loss due to increased earnings risk. However, German registry data for the years 2001-2016 reveal a moderation in higher-order earnings risk: Men and women born later face higher skewness in earnings changes, indicating fewer large decreases than increases, and lower kurtosis at younger ages, implying fewer large earnings changes. These trends point at a welfare increase and persist for 5-year earnings changes, which are more reflective of persistent changes. During the Great Recession, males' skewness dropped sharply; younger women were unaffected.

Suggested Citation

  • Isaak, Niklas & Jessen, Robin, 2024. "Moderation in Higher-Order Earnings Risk? Evidence from German Cohorts," IZA Discussion Papers 17568, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17568
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    More about this item

    Keywords

    wage risk; income dynamics; life cycle; business cycle;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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