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Unemployment duration and workers' wage aspirations in Spain

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Author Info
Namkee Ahn
J. Ignacio Garcí-Pérez

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Abstract

This paper examines unemployed workers' declared willingness to accept a job with a wage lower than the one warranted by their qualification. We analyze which personal and economic characteristics determine this willingness and how it changes as unemployment spells lengthen. Moreover, we also study the influence of this willingness on unemployment duration. The main results are: (i) Young workers, those less educated and those living in regions with high unemployment rates show a more positive attitude towards accepting lower wages while the college educated and married women with a working husband show substantially more negative attitudes; (ii) The exhaustion of unemployment benefits indeed shows significant positive effects in the transition probability of the attitude from negative to positive. This effect is even larger when unobserved heterogeneity is controlled for; (iii) Regarding the effects of this attitude on the exit probability from unemployment, we find that the expressed willingness to work for lower wages is not only reflecting the worker's reservation wage but also some unobserved heterogeneity; (iv) The negative duration dependence of the exit probability from unemployment is substantially reduced when unobserved heterogeneity is controlled for.

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Paper provided by FEDEA in its series Working Papers with number 99-20.

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Handle: RePEc:fda:fdaddt:99-20

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Related research
Keywords: Reservation wage ; unemployment duration ; unobserved heterogeneity;

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Find related papers by JEL classification:
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!] (restricted)
  2. Ahn, Namkee & De la Rica, Sara, 1997. "The Underground Economy in Spain: An Alternative to Unemployment?," Applied Economics, Taylor and Francis Journals, vol. 29(6), pages 733-43, June. [Downloadable!] (restricted)
  3. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July. [Downloadable!] (restricted)
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  4. 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. [Downloadable!] (restricted)
  5. van den Berg, Gerard J, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Blackwell Publishing, vol. 57(2), pages 255-77, April. [Downloadable!] (restricted)
  6. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, vol. 112(479), pages 223-265, April. [Downloadable!] (restricted)
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  7. Blanchard, Olivier Jean & Diamond, Peter A, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 417-34, July. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
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  9. 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. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
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  11. Garcia-Perez, J.I., 1998. "Non-Stationary Job Search with Firing: a Structural Estimation," Papers 9802, Centro de Estudios Monetarios Y Financieros-.
  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. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  14. 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.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. J. Ignacio García-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. [Downloadable!]
  2. Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Working Paper Series 2003:10, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  3. 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. [Downloadable!]
  4. 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. [Downloadable!]
    Other versions:
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This page was last updated on 2009-11-1.

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