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Reservation Wages, Search Duration, and Accepted Wages in Europe

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Author Info
Addison, John T. () (University of South Carolina and IZA Bonn)
Centeno, Mário (Banco de Portugal and Universidade Técnica de Lisboa)
Portugal, Pedro (Banco de Portugal and Universidade Nova de Lisboa)

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Abstract

This paper uses data from the European Community Household Panel, 1994-99, to investigate the arrival rate of job offers, the determinants of reservation wages, transitions out of unemployment, and accepted wages. In this exploratory treatment, we report that the arrival rate of job offers declines precipitously with jobless duration and age; that reservation wages do decline with the jobless spell (and aggregate unemployment); that transitions out of unemployment exhibit strong negative duration dependence for reasons that have more to do with the arrival rate of job offers than with reservation wages; and that the decline in reemployment wages with joblessness closely shadows the corresponding fall in reservation wages.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1252.

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Length: 26 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1252

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Related research
Keywords: reservation wages; job offer arrival rates; unemployment duration; reemployment wages;

Other versions of this item:

Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

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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. Kiefer, Nicholas M & Neumann, George R, 1979. "An Empirical Job-Search Model, with a Test of the Constant Reservation-Wage Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 89-107, February. [Downloadable!] (restricted)
  2. Jones, Stephen R G, 1989. "Reservation Wages and the Cost of Unemployment," Economica, London School of Economics and Political Science, vol. 56(222), pages 225-46, May. [Downloadable!] (restricted)
  3. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July. [Downloadable!] (restricted)
  4. Jones, Stephen R G, 1988. "The Relationship between Unemployment Spells and Reservation Wages as a Test of Search Theory," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 741-65, November. [Downloadable!] (restricted)
  5. Eswar Prasad, 2003. "What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data," IMF Working Papers 03/4, International Monetary Fund. [Downloadable!]
    Other versions:
  6. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April. [Downloadable!] (restricted)
  7. Addison, John T. & Portugal, Pedro, 2001. "Unemployment Duration: Competing and Defective Risks," IZA Discussion Papers 350, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Gorter, Dirk & Gorter, Cees, 1993. "The Relation between Unemployment Benefits, the Reservation Wage and Search Duration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 199-214, May.
  9. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November. [Downloadable!] (restricted)
Full references

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. Ricardo Llaudes, 2005. "The Phillips curve and long-term unemployment," Working Paper Series 441, European Central Bank. [Downloadable!]
  2. Peters, Michael, 2005. "Unobservable Heterogeneity in Directed Search," Micro Theory Working Papers peters-05-06-13-01-50-30, Microeconomics.ca Website, revised 16 Oct 2009. [Downloadable!]
  3. Addison, John T. & Centeno, Mário & Portugal, Pedro, 2004. "Key Elasticities in Job Search Theory: International Evidence," IZA Discussion Papers 1314, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008. [Downloadable!]
  5. Paolo Sestito & Eliana Viviano, 2008. "Reservation wages: explaining some puzzling regional patterns," Temi di discussione (Economic working papers) 696, Bank of Italy, Economic Research Department. [Downloadable!]
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