LABOR INCOME INDICES DESIGNED FOR USE IN CONTRACTS PROMOTING INCOME RISK MANAGEMENT

@inproceedings{Shiller1998LABORII,
  title={LABOR INCOME INDICES DESIGNED FOR USE IN CONTRACTS PROMOTING INCOME RISK MANAGEMENT},
  author={Robert J. Shiller and Ralph Schneider},
  year={1998}
}
We propose that labor income indices be used to define settlements in many contracts, such as labor contracts, indexed bonds, or income securities. We discuss the issues in producing labor income indices for such uses, and develop prototype indices using US. data from the Panel Study of Income Dynamics (PSID). People are grouped by a clustering algorithm based on an estimated transition matrix between jobs, by educat~on level, and by skill category. The groupings are defined so that few people… CONTINUE READING

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