Insurance within the firm



Table 7

The sensitivity of earnings to value added shocks

The first row in Panel A reports the IV estimate of the sensitivity of wages to value added
shocks
(bu for permanent shocks and bυ for transitory shocks). J-test is the test of overidentifying
restrictions. F-test is the test of joint insignificance of excluded instruments.
E (∆ωyz'∆^>ijt-τ)
is an estimate of the autocovariance of wage shocks of order τ; E (∆εjt∆εjt-τ) an estimate of
the autocovariance of value added shocks of order
τ; E (∆ω⅛'t∆εjt-τ) an estimate of the cross-
covariance of wage and value added shocks of order
τ. σ^l, σ^, σ∣ and σjl are EWMD estimates
of the variances of value added permanent shocks, value added transitory shocks, wage permanent

shocks and wage transitory shocks, respectively. ρ is an estimate of the MA coefficient of earnings.

buσu
√B[(Δ¾∙t)2]


Asymptotic standard errors are reported in parenthesis. The Ratio is calculated as:
and measures the amount of earnings variability attributable to value added shocks.

Panel A

Permanent
shock

Transitory
shock

Sensitivity          0.0599       0.0072

(0.0154)         (0.0051)

J-test (р-value)     0.1161       0.3777

F-test (р-value)    <0.0001     <0.0001

Panel B

Moment

Estimate

Parameter

Estimate

E (∆ωijАш,i)

0.0139
(0.0004)

0.0229
(0.0035)

e (∆шŋ't∆cθijf_i)

-0.0055
(0.0003)

συ

0.0334
(0.0048)

E (A^ij't∆zjt)

0.0019
(0.0002)

σl

0.0058
(0.0015)

e (A^ij't∆εjt-1)

-0.0002

(0.0002)

σ

0.0034
(0.0011)

E (∆ε3 i∆ε, i)

0.0820
(0.0052)

ρ

-0.1606

(0.0863)

E (∆ε,∙ t∆ε3t-1)

-0.0310
(0.0039)

Ratio

0.0769

47



More intriguing information

1. ‘Goodwill is not enough’
2. The Institutional Determinants of Bilateral Trade Patterns
3. The name is absent
4. The name is absent
5. STIMULATING COOPERATION AMONG FARMERS IN A POST-SOCIALIST ECONOMY: LESSONS FROM A PUBLIC-PRIVATE MARKETING PARTNERSHIP IN POLAND
6. Why unwinding preferences is not the same as liberalisation: the case of sugar
7. Retirement and the Poverty of the Elderly in Portugal
8. Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica
9. Language discrimination by human newborns and by cotton-top tamarin monkeys
10. Informal Labour and Credit Markets: A Survey.