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Unemployment duration and workers' wage aspirations in Spain

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  • Namkee Ahn

    ()
    (FEDEA, Jorge Juan 46, 28001 Madrid, Spain Universitat Pompeu Fabra, Department of Economics and Business, C/ Ramón Trias Fargas 25-27, 08005 Barcelona, Spain)

  • José Ignacio García-Pérez

    ()
    (FEDEA, Jorge Juan 46, 28001 Madrid, Spain Universitat Pompeu Fabra, Department of Economics and Business, C/ Ramón Trias Fargas 25-27, 08005 Barcelona, Spain)

Abstract

This paper examines unemployed workers' declared willingness to work for wages lower than the one adequate for their qualification. We analyze which personal and economic characteristics determine this willingness and how it changes along the individuals' unemployment spells. The main results are: (i) Young workers, less educated and those living in regions or times of high unemployment are more willing to accept reduced wages while married women with a working husband are much less willing to do so; (ii) Once the individual fixed effect is controlled for, the willingness to work for reduced wages increases with the duration of unemployment; (iii) Not having access to unemployment benefits increases the probability that initially unwilling workers become willing to accept reduced wages.

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Bibliographic Info

Article provided by Springer in its journal Spanish Economic Review.

Volume (Year): 4 (2002)
Issue (Month): 2 ()
Pages: 103-118

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Handle: RePEc:spr:specre:v:4:y:2002:i:2:p:103-118

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Related research

Keywords: Willingness to work for lower wages; reservation wage; unemployment duration; unobserved heterogeneity;

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References

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  1. Stancanelli, Elena G F, 1999. " Do the Rich Stay Unemployed Longer? An Empirical Study for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 295-314, August.
  2. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Ahn, Namkee & de la Rica, Sara & Ugidos, Arantza, 1999. "Willingness to Move for Work and Unemployment Duration in Spain," Economica, London School of Economics and Political Science, vol. 66(263), pages 335-57, August.
  4. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Pissarides, Christopher A, 1992. "Loss of Skill during Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1371-91, November.
  6. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
  7. Bover, O. & Arellano, M. & Bentolila, S., 1997. "Unemployment Duration, Benefit Duration, and the Business Cycle," Papers 9717, Centro de Estudios Monetarios Y Financieros-.
  8. Berg, G.J. van den, 1987. "Nonstationarity in job search theory," Research Memorandum 242, Tilburg University, Faculty of Economics and Business Administration.
  9. Ahn, Namkee & Ugidos-Olazabal, Arantza, 1995. "Duration of Unemployment in Spain: Relative Effects of Unemployment Benefit and Family Characteristics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 249-64, May.
  10. Garcia-Perez, J.I., 1998. "Non-Stationary Job Search with Firing: a Structural Estimation," Papers 9802, Centro de Estudios Monetarios Y Financieros-.
  11. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  12. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-38, February.
  13. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
  14. Namkee Ahn & Sara La De Rica, 1997. "The underground economy in Spain: an alternative to unemployment?," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 733-743.
  15. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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Citations

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Cited by:
  1. Yolanda Rebollo Sanz & José Ignacio García-Pérez, 2006. "A Structural Estimation to Evaluate the Wage Penalty After Unemployment in Europe," Working Papers 06.26, Universidad Pablo de Olavide, Department of Economics.
  2. José Ignacio García Pérez & Fernando Múñoz Bullón, 2001. "The Nineties in Spain: so much Flexibility in the Labor Market?," Economic Working Papers at Centro de Estudios Andaluces E2001/01, Centro de Estudios Andaluces.
  3. Peter Fredriksson & Bertil Holmlund, 2006. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 357-386, 07.
  4. Jacobo de Uña Álvarez & Gema Álvarez Llorente & Mª Soledad Otero Giráldez, 2004. "Estimation of time spent in unemployment for married women: An application at regional level," Working Papers 0410, Universidade de Vigo, Departamento de Economía Aplicada.
  5. Gema Álvarez Llorente & Mª Soledad Otero Giráldez & Alberto Rodríguez Casal & Jacobo de Uña Álvarez, 2004. "La duración del desempleo de la mujer casada en Galicia," Working Papers 0409, Universidade de Vigo, Departamento de Economía Aplicada.
  6. J. Ignacio Garc�a-Pérez, 2006. "Job separation in a non-stationary search model: a structural estimation to evaluate alternative unemployment insurance systems," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 245-272.
  7. Anders Forslund & Alan Krueger, 2010. "Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 159-187 National Bureau of Economic Research, Inc.

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