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  3. American Economic Review
  4. May 2017
  5. Worker Betas: Five Facts about Systematic Earnings Risk

Worker Betas: Five Facts about Systematic Earnings Risk

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Abstract

The magnitude of and heterogeneity in systematic earnings risk has important implications for various theories in macro, labor, and financial economics. Using administrative data, we document how the aggregate risk exposure of individual earnings to GDP and stock returns varies across gender, age, the worker's earnings level, and industry. Aggregate risk exposure is U-shaped with respect to the earnings level. In the middle of the earnings distribution, aggregate risk exposure is higher for males, younger workers, and construction and durable manufacturing. At the top of the earnings distribution, aggregate risk exposure is higher for older workers and finance.

Citation

Guvenen, Fatih, Sam Schulhofer-Wohl, Jae Song, and Motohiro Yogo. 2017. "Worker Betas: Five Facts about Systematic Earnings Risk." American Economic Review, 107 (5): 398-403. DOI: 10.1257/aer.p20171094

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • E23 Macroeconomics: Production
  • J16 Economics of Gender; Non-labor Discrimination
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials
  • L60 Industry Studies: Manufacturing: General
  • L74 Construction