It is likely that most people's perceptions of economic insecurity depend heavily on their purchasing power,which in turn depends on both their asset ownership and their labor-market status-both employment and income earned there from.In reality,the large majority of people rely much more on labor income than capital income for purchasing power.Accordingly,we think labor-market status is the main determinant of perceptions of economic insecurity. In light of this labor-market focus,we conjecture that the economic misfortunes underlying people's economic insecurity stem mainly from more-volatile employment and/or wage interactions with their employers.That is,risk-averse workers are not indifferent between employment options that yield the same amount of expected earnings but with differing degrees of certainty.More-certain earnings outcomes-due to more-certain wage and/or employment realizations-are preferred to less-certain ones,and insecurity rises with this uncertainty. 2.2 Worker Insecurity in Labor-Market Equilibrium:Why FDI Matters Equilibrium in a standard competitive labor market is set by the intersection of labor supply and labor demand.The labor-supply curve is aggregated across individuals,and at each point It is important to note that there is now a large body of evidence that labor-market volatility has been rising in many countries,especially in the 1990s,in terms of greater earnings volatility, declining job tenure,and self reports.Gottschalk and Moffitt (1994)report substantial increases in year-to-year earnings volatility for the United States over the 1970s and 1980s.Looking at the 1990s as well,a symposium issue of the Journal of Labor Economics (1999)documented declines in U.S job stability,especially in the 1990s for large groups of workers such as those with more tenure.Within that symposium issue,Schmidt's(1999)analysis of individual surveys finds that U.S.workers in the 1990s were more pessimistic about losing their jobs than they were during the 1980s-despite the ongoing economic expansion of the 1990s.4 It is likely that most people’s perceptions of economic insecurity depend heavily on their purchasing power, which in turn depends on both their asset ownership and their labor-market status—both employment and income earned there from. In reality, the large majority of people rely much more on labor income than capital income for purchasing power. Accordingly, we think labor-market status is the main determinant of perceptions of economic insecurity. In light of this labor-market focus, we conjecture that the economic misfortunes underlying people’s economic insecurity stem mainly from more-volatile employment and/or wage interactions with their employers. That is, risk-averse workers are not indifferent between employment options that yield the same amount of expected earnings but with differing degrees of certainty. More-certain earnings outcomes—due to more-certain wage and/or employment realizations—are preferred to less-certain ones, and insecurity rises with this uncertainty.1 2.2 Worker Insecurity in Labor-Market Equilibrium: Why FDI Matters Equilibrium in a standard competitive labor market is set by the intersection of labor supply and labor demand. The labor-supply curve is aggregated across individuals, and at each point 1 It is important to note that there is now a large body of evidence that labor-market volatility has been rising in many countries, especially in the 1990s, in terms of greater earnings volatility, declining job tenure, and self reports. Gottschalk and Moffitt (1994) report substantial increases in year-to-year earnings volatility for the United States over the 1970s and 1980s. Looking at the 1990s as well, a symposium issue of the Journal of Labor Economics (1999) documented declines in U.S job stability, especially in the 1990s for large groups of workers such as those with more tenure. Within that symposium issue, Schmidt’s (1999) analysis of individual surveys finds that U.S. workers in the 1990s were more pessimistic about losing their jobs than they were during the 1980s—despite the ongoing economic expansion of the 1990s