Linking risk aversion and type of employment

Employees whose incomes have a variable component should exhibit lower risk aversion than fixed-income earners. This hypothesis is tested on 258 individuals interviewed in Italy, aged between 25 and 40 in the course of face-to-face-interviews. We find that the probability of being a variable income earner decreases with risk-aversion. Further, we investigate the link between risk preferences and job insecurity and find that women in temporary jobs are more risk averse than women in permanent ones.

Research highlights► We test if risk aversion differs between variable income and fixed wage earners. ► We investigate whether job instability is related to risk preference. ► The study finds that variable income earners exhibit lower risk aversion. ► Women in temporary jobs are more risk averse than those in permanent ones.