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The critical wage, unemployment duration, and wage expectations: The case of Chile

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  • Sholeh A. Maani
  • A. H. Studenmund
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    Abstract

    This study tests the relevance of the job search model to understanding unemployment in developing countries by utilizing a 1982 data set describing unemployed men in Chile. The findings indicate that the model is relevant to a developing country: the job seekers studied based their critical wages on their perceptions of their own productivity, economic resources, and search costs, and they reduced their wage requirements as the duration of their unemployment increased. The authors also show, in the first direct test of this question, that the critical wage and the expected wage are determined jointly and that the expected wage is adjusted to duration of unemployment mainly in response to the fall in the critical wage. (Abstract courtesy JSTOR.)

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    Bibliographic Info

    Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

    Volume (Year): 39 (1986)
    Issue (Month): 2 (January)
    Pages: 264-276

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    Handle: RePEc:ilr:articl:v:39:y:1986:i:2:p:264-276

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    Cited by:
    1. Leppin, Julian Sebastian, 2012. "The estimation of reservation wages: A simulation-based comparison," HWWI Research Papers 124, Hamburg Institute of International Economics (HWWI).
    2. Stephan Humpert & Christian Pfeifer, 2011. "Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective," Working Paper Series in Economics 214, University of Lüneburg, Institute of Economics.
    3. Katarzyna Budnik, 2012. "Do those who stay work less? On the impact of emigration on the measured TFP in Poland," National Bank of Poland Working Papers 113, National Bank of Poland, Economic Institute.

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