Individual Risk Aversion and Public Sector Socialization: Evidence From a Longitudinal Study

Abstract

Does working in the public sector make people more risk averse? Using longitudinal data from the German Socio-Economic Panel (SOEP, 2008–2018), this study examines whether public sector work experience influences individual risk aversion over time. Fixed-effects and supplementary within-person analyses were conducted to test the socialization hypotheses. The results show that while public sector work experience per se does not affect individuals’ risk aversion once overall work experience is controlled for, an interaction between public and total work experience suggests that risk aversion may gradually increase among long-term public employees. However, the effect size is small, and additional within-person analyses indicate that individual risk aversion remains stable over time. These findings suggest that, rather than being substantially reshaped by public sector workplace context, individual risk aversion functions as a relatively stable personal disposition that interacts modestly with institutional experience. Implications for public employee socialization are discussed.