Do Firms Provide Wage Insurance against Shocks?

Kátay, Gábor

doi:10.1111/sjoe.12128

“…The first differenced residuals show that the first and second lag are significant and becomes insignificant at lag 3. This is similar to the results by Guiso et al (2005), Cardoso &Portela (2009), andKátay (2008), and is consistent with an MA(2) process.…”

supporting

confidence: 81%

“…In order to investigate how family firms react when exposed to shocks at the individual firm level, I will follow the strategy proposed by Guiso et al (2005) to separate the firm level shock into a permanent and a transitory component. A more recent adoption of this strategy include Cardoso & Portela (2009) and Kátay (2008).…”

Section: Introductionmentioning

confidence: 99%

Sensitivity to shocks and implicit employment protection in family firms

Bjuggren

¹

2015

Journal of Economic Behavior & Organization

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract In this study I present empirical evidence that employment in family firms is less sensitive to performance and product market fluctuations, both at the industry and at the firm level. This supports the idea that family firms are able to offer their employees implicit employment protection. Family firms are believed to have longer time horizons, and are as owners more easily identified with their company and its actions. Terms of use: Documents inThese are features that could make family firms more cautious in terms of adjusting their employment. I confirm previous findings that family firms are less sensitive to sales fluctuations at the industry level and I show that this also holds for fluctuations in value added. I extend the analysis to show that family firms are less sensitive to unanticipated industry shocks by filtering out the trend component. When investigating idiosyncratic shocks to the firm, I find that family firms are less anxious to translate temporary shocks in performance into changes in employment. By using full population data from tax registers, I am able to identify all family firms, both listed and non-listed. This has previously not been feasible.

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“…The list of papers includeFagereng et al (2016),Cardoso and Portela (2009),Katay (2009),Guertzgen (2014),and LeBarbanchon and Tarasonis (2011). These papers generally find no transmission of temporary shocks and a partial transmission of permanent shocks which range from 0.03 to 0.10.…”

mentioning

confidence: 99%

Firm Performance and the Volatility of Worker Earnings

Juhn

¹

,

McCue

²

,

Monti

³

et al. 2018

Journal of Labor Economics

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for helpful comments on an earlier version. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, or the National Bureau of Economic Research. All results have been reviewed to ensure that no confidential information is disclosed. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…This leads us to conclude that the auto‐correlation structure is in line with an MA(1) process of

Δ ε_{jt}

and an MA(0) process of

ε_{jt} .

A representation of

ε_{jt}

that is consistent with the data is therefore

ε_{jt} = ζ_{jt} + {\tilde{υ}}_{jt},

with

ζ_{jt}

denoting the permanent component which follows a random‐walk process

ζ_{jt} = ζ_{jt - 1} + {\tilde{u}}_{jt},

and

{\tilde{υ}}_{jt}

representing the transitory component which follows an MA(0) process. This result differs from previous studies, which provided evidence of an MA(1) process (Cardoso and Portela, ; Guiso et al ., ; Kátay, ). Thus, compared with these studies the auto‐correlation structure in our data set points to even more temporary shocks, which fade away immediately in the subsequent time period.…”

Section: Empirical Analysismentioning

confidence: 98%

Wage Insurance Within German Firms: Do Institutions Matter?

Guertzgen

¹

2013

Journal of the Royal Statistical Society Series A: Statistics in Society

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Terms of use: Documents in EconStor mayDownload this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp09043.pdfWage Insurance within German Firms: Do Institutions Matter?Nicole Guertzgen Centre for European Economic Research, Mannheim * July 2009Abstract Using a large linked employer-employee data set, this paper studies the extent to which employers insure workers against transitory and permanent firm-level shocks. Particular emphasis is given to the question of whether the amount of wage insurance depends on the nature of industrial relations. Adopting the identification strategy proposed by Guiso et al. (2005), it is shown that wage insurance is particularly apparent for individuals subject to collective wage agreements. While collective contracts alone are sufficient to fully insure workers against transitory shocks in small plants, they provide only partial insurance in medium-sized and large plants. At large employers, the joint existence of collective contracts and works councils helps to provide full insurance against transitory shocks, but provides only partial insurance against permanent shocks. This finding is consistent with the amount of insurance against permanent shocks being constrained by the possibility of considerable job losses and bankruptcy. Non-technical summary: Drawing on a large-scale German Linked EmployerEmployee data set, this paper studies the extent to which employers insure workers against firm-level shocks. Particular emphasis is given to the question of whether trade unions and works councils facilitate risk-sharing contracts between workers and firms. Given that the extent of insurance should critically depend on the frequency of the shock, we adopt the identification strategy proposed by Guiso et al. (2005), which enables us to distinguish between transitory and permanent shocks.In addressing the role of collective bargaining coverage for the amount of wage insurance, our results offer a remarkably consistent picture. Wage insurance is found to be particularly apparent for employers who are subject to collective wage agreements. Moreover, the ability of collective contracts to provide wage ins...

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Do Firms Provide Wage Insurance against Shocks?

Cited by 17 publications

References 34 publications

Sensitivity to shocks and implicit employment protection in family firms

Sensitivity to shocks and implicit employment protection in family firms

Firm Performance and the Volatility of Worker Earnings

Wage Insurance Within German Firms: Do Institutions Matter?

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