Insurance within the firm



Table 8

The sensitivity of earnings to value added shock:
Accounting for parameter heterogeneity

The omitted characteristic is the interaction with “Production worker”. Asymptotic standard
errors are reported in parenthesis; the partial
R2 for the reduced-form regression is reported in
square brackets (see Shea, 1997).
J-test is the test of overidentifying restrictions.

Sensitivity to Sensitivity to
permanent shocks transitory shocks
(1)(2)

ʌɛp

-0.1885

-0.0460

(0.1367)

(0.0491)

[0.0417]

[0.2513]

ʌsj⅛*High risk aversion

-0.0764

0.0080

(0.0304)

(0.0161)

[0.0706]

[0.1987]

ʌe,-/--Clerical worker

-0.0026

-0.0130

J t^

(0.0311)

(0.0165)

[0.0713]

[0.2055]

ʌɛ? ⅛*Manager

0.0815

-0.0344

(0.1131)

(0.0390)

[0.0627]

[0.3187]

ʌɛ?⅛* Worker Age

0.0002

0.0002

(0.0018)

(0.0006)

[0.0341]

[0.2497]

ʌɛji*s.d.[ln (VAji)]

-0.0338

-0.0041

(0.0148)

(0.0070)

[0.0312]

[0.3624]

ʌe,'+-District

0.0712

0.0065

(0.0286)

(0.0127)

[0.0666]

[0.2437]

ʌsjt * [ln (Firm size)]

0.0906

0.0250

(0.0360)

(0.0160)

ʌejt * [ln (Firm size)]2

[0.0521]

[0.2179]

-0.0065

-0.0028

(0.0026)

(0.0015)

[0.0723]

[0.1872]

J-test (p-value)

0.0851

0.1459

48



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