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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)

  • 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. KIEFER, Nicholas M. & NEUMANN, George R., . "An empirical job-search model, with a test of the constant reservation-wage hypothesis," CORE Discussion Papers RP -358, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. John T. Addison & Pedro Portugal, 2000. "Unemployment Duration: Competing and Defective Risks," Working Papers w200001, Banco de Portugal, Economics and Research Department.
  3. 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.
  4. 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.
  5. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
  6. 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.
  7. Prasad, Eswar, 2003. "What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data," IZA Discussion Papers 694, Institute for the Study of Labor (IZA).
  8. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
  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. 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.
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Citations

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Cited by:
  1. Luis Centeno & Mário Centeno & Álvaro A. Novo, 2008. "Evaluating Job Search Programs for Old and Young Individuals: Heterogeneous Impact on Unemployment Duration," Working Papers w200806, Banco de Portugal, Economics and Research Department.
  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. Llaudes, Ricardo, 2005. "The Phillips curve and long-term unemployment," Working Paper Series 0441, European Central Bank.
  4. Ana Rute Cardoso & Paulo Guimarães & Pedro Portugal, 2013. "Everything you always wanted to know about sex discrimination," Working Papers w201302, Banco de Portugal, Economics and Research Department.
  5. 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.
  6. 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.
  7. John T. Addison & Mário Centeno & Pedro Portugal, 2004. "Key Elasticities in Job Search Theory: International Evidence," Working Papers w200412, Banco de Portugal, Economics and Research Department.
  8. 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).
  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. 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.
  11. 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.
  12. 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.
  13. repec:wrk:warwec:991 is not listed on IDEAS

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