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Risk Preference and Employment Contract Type
| Venue: | Journal of the Royal Statistical Society, Series A |
| Citations: | 10 - 0 self |
BibTeX
@ARTICLE{Brown_riskpreference,
author = {Sarah Brown and Lisa Farrell and Mark N. Harris and John G. Sessions and Sarah Browna and Lisa ~arre L L and Mark N. Harrisc and John G. Sessionsd and Leicestershire Lei Rh},
title = {Risk Preference and Employment Contract Type},
journal = {Journal of the Royal Statistical Society, Series A},
year = {},
pages = {2006}
}
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Abstract
Abstract: We consider three broad types of employment contract vis, self-employment, PRP, and fixed wage employment. We focus on the implied degree of income risk associated with each type of employment contract, arguing that such risk falls as we move from self-employment at one extreme to fixed wage employment at the other. We investigate the possibility that there is a systematic relationship between employment within a particular contract type and risk preference as proxied by expenditure on risky goods and goods associated with risk averse behaviour. A typical question might be: 'do self-employed individuals attempt to compensate for the relatively high level of income risk they face by reducing their expenditure on relatively risky goods? Or, do such individuals have a taste for risk which they express in both their working and non-working life? ' Our empirical analysis, based on pooled cross-section data drawn from the British Family Expenditure Survey 1997-2000, provides evidence of a systematic relationship between employment contract type and risk preference, with, for example, self-employed workers being more (less) likely to engage in the consumption of "risky " (financial security) products. The results are based the Ordered Generalized Extreme Values model (OGEV), a relatively infrequently used discrete choice model, which importantly
Keyphrases
risk preference employment contract type wage employment income risk systematic relationship risky good employment contract self-employed individual self-employed worker implied degree ordered generalized extreme value model empirical analysis discrete choice model pooled cross-section data drawn non-working life broad type british family expenditure survey high level financial security typical question particular contract type risk fall
