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Reservation Wages, Search Duration, and Accepted Wages in Europe

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  • Addison, John T.

    ()
    (University of South Carolina)

  • Centeno, Mario

    ()
    (Banco de Portugal)

  • Portugal, Pedro

    ()
    (Banco de Portugal)

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

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References

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  1. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
  2. 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.
  3. 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.
  4. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
  5. John T. Addison & Pedro Portugal, 2003. "Unemployment Duration Competing and Defective Risks," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
  6. Christopher J. Flinn, 1986. "Econometric Analysis of CPS-Type Unemployment Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 456-484.
  7. 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.
  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. 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.
  10. 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.
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Citations

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Cited by:
  1. Cardoso, Ana Rute & Guimaraes, Paulo & Portugal, Pedro, 2012. "Everything You Always Wanted to Know about Sex Discrimination," IZA Discussion Papers 7109, Institute for the Study of Labor (IZA).
  2. Akiko Maruyama, 2013. "Learning about one’'s own type: a search model with two-sided uncertainty," GRIPS Discussion Papers 12-24, National Graduate Institute for Policy Studies.
  3. Addison, John T. & Machado, José & Portugal, Pedro, 2010. "The Reservation Wage Unemployment Duration Nexus," IZA Discussion Papers 5077, Institute for the Study of Labor (IZA).
  4. Antonio Accetturo & Luigi Infante, 2011. "Skills or culture? An analysis of the decision to work by immigrant women in Italy," Temi di discussione (Economic working papers) 815, Bank of Italy, Economic Research and International Relations Area.
  5. Llaudes, Ricardo, 2005. "The Phillips curve and long-term unemployment," Working Paper Series 0441, European Central Bank.
  6. Centeno, Luis & Centeno, Mário & Novo, Álvaro A., 2009. "Evaluating job-search programs for old and young individuals: Heterogeneous impact on unemployment duration," Labour Economics, Elsevier, vol. 16(1), pages 12-25, January.
  7. Paolo Sestito & Eliana Viviano, 2008. "Reservation wages: explaining some puzzling regional patterns," Temi di discussione (Economic working papers) 696, Bank of Italy, Economic Research and International Relations Area.
  8. 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.
  9. Daniel Gutknecht, 2013. "Testing for Monotonicity under Endogeneity An Application to the Reservation Wage Function," Economics Series Working Papers 673, University of Oxford, Department of Economics.
  10. repec:wrk:warwec:991 is not listed on IDEAS
  11. Addison, John T. & Centeno, Mario & Portugal, Pedro, 2004. "Key Elasticities in Job Search Theory: International Evidence," IZA Discussion Papers 1314, Institute for the Study of Labor (IZA).
  12. Cecilia Garavito Masalías, 2010. "Vulnerabilidad en el empleo, género y etnicidad en el Perú," Revista Economía, Departamento de Economía - Pontificia Universidad Católica del Perú, vol. 33(66), pages 89-127.
  13. Peters, Michael, 2005. "Unobservable Heterogeneity in Directed Search," Microeconomics.ca working papers peters-05-06-13-01-50-30, Vancouver School of Economics, revised 16 Oct 2009.
  14. Talarowski, David, 2012. "Estimation des élasticités du modèle de recherche d'emploi sur données françaises
    [Estimation of the elasticities of the model of job search on French data]
    ," MPRA Paper 38366, University Library of Munich, Germany.

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