Risk, Job Search, and Income Distribution.

One of the by-products of the literature which followed the publication of Phillips's (1958) well-known paper was the development and elaboration of models of individual behavior in labor-market disequilibrium (see Phelps [1969] for a survey). In retrospect this may be the most significant consequence of the Phillips curve analysis, since the labor-market models may suggest ways for tackling the wider problem of the adjustment to equilibrium which is still in a very messy state, in this paper we shall consider one aspect of the problem which has been neglected by the "new microeconomics," namely, the implications of attitudes toward risk for individual behavior in disequilibrium. Section II introduces the concept of a risk premium which is then used in Section III to analyze the relationship between individual behavior toward risk, job search, and the structure of wage offers by firms. Sections IV and V consider the relationship between the distribution of risk attitudes and the distribution of income and wealth among individuals. A concluding section points out some of the implications of the analysis for empirical research. [ABSTRACT FROM AUTHOR]