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Reservation wages, labour market participation and health

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  • Sarah Brown
  • Jennifer Roberts
  • Karl Taylor

Abstract

The concept of the reservation wage has played an important role in labour market theory, particularly in models of job search, labour supply and labour market participation. We focus on the determinants of reservation wages, with a particular focus on health, which has attracted very little attention despite its importance from a policy perspective. Using UK data we estimate an endogenous switching model which predicts reservation wages for the unemployed and market wages for the employed. Our results have important policy implications since they suggest that poor health is a major cause of economic inactivity. Copyright (c) 2010 Royal Statistical Society.

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Bibliographic Info

Article provided by Royal Statistical Society in its journal Journal of the Royal Statistical Society: Series A (Statistics in Society).

Volume (Year): 173 (2010)
Issue (Month): 3 ()
Pages: 501-529

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Handle: RePEc:bla:jorssa:v:173:y:2010:i:3:p:501-529

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References

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Citations

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Cited by:
  1. Brown, Sarah & Taylor, Karl, 2011. "Reservation wages, market wages and unemployment: Analysis of individual level panel data," Economic Modelling, Elsevier, vol. 28(3), pages 1317-1327, May.
  2. Brown, Sarah & Roberts, Jennifer & Taylor, Karl, 2011. "The gender reservation wage gap: Evidence from British Panel data," Economics Letters, Elsevier, vol. 113(1), pages 88-91, October.
  3. Alan S Duncan & Mark N Harris & Anthony Harris & Eugenio Zucchelli, 2013. "The Influence of Psychological Well-being, Ill Health and Health Shocks on Single Parents' Labour Supply," Bankwest Curtin Economics Centre Working Paper series WP1307, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
  4. Humpert, Stephan & Pfeifer, Christian, 2013. "Explaining age and gender differences in employment rates : a labor supply side perspective," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(1), pages 1-17.
  5. Yolanda Pena-Boquete & Manuel Flores, 2013. "Earnings returns to education, experience and health: Evidence from EU-SILC," ERSA conference papers ersa13p1169, European Regional Science Association.
  6. Zucchelli, E.; & Harris, M.; & Zhao, X.;, 2012. "Ill-health and transitions to part-time work and self-employment among older workers," Health, Econometrics and Data Group (HEDG) Working Papers 12/04, HEDG, c/o Department of Economics, University of York.
  7. Manuel Flores & Adriaan Kalwij, 2013. "What do wages add to the health-employment nexus? Evidence from older European workers," Documentos de trabajo - Analise Economica 0054, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  8. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.
  9. Castro, Alyssa Mae & Deluna, Roperto Jr, 2013. "Factors Affecting Call Center as a Job Preference among Employees in Davao City," MPRA Paper 51678, University Library of Munich, Germany.

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