Risk Premium for Loss of Employment in Polish Regions
Risk Premium for Loss of Employment in Polish Regions

Summary/Abstract: In previous papers of the series, having applied the income-based valuation method of intellectual capital of a region, the author discovered a need for valuation of the risk premium which should be included in the discount rate of labour income. Undoubtedly, both the loss of employment and the amount of labour income contribute to the intuitive calculation of economic migration. The income-based valuation of the right to a certain sequence of income at a certain risk level, properly integrates these factors as one value, providing a clear criterion of selection is assured. Because the labour market does not generate the values that allow the adaptation of the CAPM model, a completely new method of the risk premium valuation has been proposed which produces corresponding results to those based on the CAPM model. The method was applied to respective regions of Poland i.e. voivodeships. As the result, the equity premium puzzle of the Polish labour market was revealed. Due to significant amount of estimates, the obtained results are just the first attempt towards solution of the problem.

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