Risk Sharing in Labor Markets

Empirical work in labor economics has focused on rent sharing as an explanation for the observed correlation between wages and profitability. The alternative explanation of risk sharing between workers and employers has not been tested. Using a unique panel data set for four African countries, Authors find strong evidence of risk sharing. Workers in effect offer insurance to employers: when firms are hit by temporary shocks, the effect on profits is cushioned by risk sharing with workers. Rent sharing is a symptom of an inefficient labor market. Risk sharing; by contrast, can be seen as an efficient response to missing markets. Authors evidence suggests that risk sharing accounts for a substantial part of the observed effect of shocks on wages.

Bibliographic Details

Main Authors:	Bigsten, Arne, Collier, Paul, Dercon, Stefan, Fafchamps, Marcel, Gauthier, Bernard, Gunning, Jan Willem, Oduro, Abena, Oostendorp, Remco, Pattillo, Cathy, Soderbom, Mans, Teal, Francis, Zeufack, Albert
Format:	Journal Article biblioteca
Language:	English en_US
Published:	Washington, DC: World Bank 2003-09
Subjects:	AVERAGE WAGE, AVERAGE WAGES, BARGAINING, BARGAINING POWER, BORROWING, CAPITAL STOCK, COBB-DOUGLAS PRODUCTION FUNCTION, COMMERCIAL CONTRACTS, COMPETITIVE MODEL, CONTRACT ENFORCEMENT, CONTRACTUAL RELATIONS, CREDIT MARKET, CREDIT MARKETS, CREDIT RATIONING, CRISES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DISPUTE ¨ RESOLUTION, DUMMY VARIABLES, ECONOMETRIC ANALYSIS, ECONOMIC DEVELOPMENT, ECONOMIC PERFORMANCE, ECONOMIC RENTS, EFFICIENCY WAGES, ELASTICITY, EMPLOYEE, EMPLOYMENT, EQUILIBRIUM UNEMPLOYMENT, EXCHANGE RATE, EXOGENOUS SHOCKS, EXPECTED VALUE, EXPORTS, FINANCIAL MARKETS, FIRM PERFORMANCE, FIRM SIZE, GOVERNMENT INTERVENTION, HIGH WAGE, HOLDING, HUMAN CAPITAL, IMPLICIT CONTRACT, IMPLICIT CONTRACTS, INCOME, INEFFICIENCY, INFORMAL CREDIT, INSTRUMENT, INSURANCE, INSURANCE MARKET, INSURANCE MARKETS, INTERNATIONAL BANK, INVENTORIES, LABOR CONTRACTS, LABOR ECONOMICS, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LABOR SUPPLY, LABOR TURNOVER, LIQUID ASSETS, LIQUIDITY, LIQUIDITY CRISES, MISSING MARKETS, MONETARY FUND, NEGATIVE SHOCK, NEGATIVE SHOCKS, OCCUPATION, OPTIMAL CONTRACT, PERMANENT SHOCK, PERMANENT SHOCKS, POLITICAL ECONOMY, PRICE VOLATILITY, PRIMARY EDUCATION, PRODUCTION FUNCTION, PRODUCTION WORKERS, PRODUCTIVITY, RATES OF RETURN, RENTS, RISK AVERSE, RISK AVERSION, RISK PREMIUM, RISK SHARING, STOCKS, SUPPLIERS, SUPPLY CURVE, TOTAL OUTPUT, TOTAL WAGE, TRANSACTION, TRANSACTION COSTS, UNEMPLOYED, UNEMPLOYMENT, VALUE ADDED, WAGE BARGAINING, WAGE BILL, WAGE DIFFERENTIALS, WAGE EFFECT, WAGE INCREASE, WAGE LEVELS, WAGE PREMIUM, WAGE RATE, WAGE RATES, WAGE RIGIDITY, WAGES, WORK EXPERIENCE, WORKER, WORKER HETEROGENEITY, WORKERS,
Online Access:	http://documents.worldbank.org/curated/en/2003/09/17742612/risk-sharing-labor-markets https://hdl.handle.net/10986/17184
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