Risk attitudes, job mobility and subsequent wage growth during the early career

Argaw, Bethlehem A. ; Maier, Michael F. ; Skriabikova, Olga J.

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URL: https://ub-madoc.bib.uni-mannheim.de/43363
URN: urn:nbn:de:bsz:180-madoc-433639
Document Type: Working paper
Year of publication: 2017
The title of a journal, publication series: ZEW Discussion Papers
Volume: 17-023
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D81 , J31 , J62,
Keywords (English): Risk attitudes , job mobility , wage growth , early career development
Abstract: Job change is a decision under uncertainty: It is associated with costs whereas the decision is made without full knowledge about future benefits. In order to investigate the relationship between willingness to take risks and job mobility, we first extend a model for on-the-job search with nonwage job characteristics by including heterogeneity in risk attitudes. Second, we empirically test the model's implications showing that individuals who are more risk-averse choose to change their jobs less often than more risk-tolerant individuals. This difference in the job changing behaviour leads to only moderate differences wage growth during early career: Risk-averse individuals tend to have on average higher wage gains from each job change and have obtained higher overall wage growth at the end of the early career phase.

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