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Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages

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  • Addison, John T.

    ()
    (University of South Carolina)

  • Centeno, Mario

    ()
    (Banco de Portugal)

  • Portugal, Pedro

    ()
    (Banco de Portugal)

Abstract

Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining 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 3289.

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Length: 13 pages
Date of creation: Jan 2008
Date of revision:
Publication status: published in: Journal of Labor Research, 2009, 30 (1), 1 - 8
Handle: RePEc:iza:izadps:dp3289

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Keywords: arrival rate of job offers; unemployment benefits; reservation wages; probability of reemployment;

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References

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  1. Bloemen, Hans G & Stancanelli, Elena G F, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 400-439, April.
  2. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366, September.
  3. 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.
  4. John T. Addison & M�Rio Centeno & Pedro Portugal, 2010. "Unemployment Benefits and Reservation Wages: Key Elasticities from a Stripped-Down Job Search Approach," Economica, London School of Economics and Political Science, vol. 77(305), pages 46-59, 01.
  5. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
  6. repec:spo:wpecon:info:hdl:2441/9704 is not listed on IDEAS
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Citations

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Cited by:
  1. Stephan Humpert & Christian Pfeifer, 2012. "Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective," SOEPpapers on Multidisciplinary Panel Data Research 449, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Monika Merz, 2014. "Aggregation and Labor Supply Elasticities," 2014 Meeting Papers 51, Society for Economic Dynamics.
  3. Alois Kneip & Monika Merz & Lidia Storjohann, 2013. "Aggregation and Labor Supply Elasticities," SOEPpapers on Multidisciplinary Panel Data Research 606, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Peeters, Marga & Den Reijer, Ard, 2011. "On wage formation, wage flexibility and wage coordination : A focus on the wage impact of productivity in Germany, Greece, Ireland, Portugal, Spain and the United States," MPRA Paper 31102, University Library of Munich, Germany.
  5. Stefan Arent & Wolfgang Nagl, 2011. "Unemployment Benefit and Wages: The Impact of the Labor Market Reform in Germany on (Reservation) Wages," Ifo Working Paper Series Ifo Working Paper No. 101, Ifo Institute for Economic Research at the University of Munich.
  6. Anabela Carneiro & Pedro Portugal & José Varejão, 2013. "Catastrophic Job destruction," Working Papers w201314, Banco de Portugal, Economics and Research Department.
  7. Stefan Arent & Wolfgang Nagl, 2011. "Löhne und Arbeitslosengeld: Wie haben sich die HARTZ-Reformen auf die Lohnentwicklung ausgewirkt?," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 18(03), pages 03-07, 06.
  8. Wolfgang Nagl, 2014. "Lohnrisiko und Altersarmut im Sozialstaat," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 54, July.
  9. Wolfgang Nagl & Stefan Arent, 2012. "Unemployment Benefits and Wages: Evidence from the German Hartz-Reform," ERSA conference papers ersa12p78, European Regional Science Association.
  10. Centeno, Mario & Novo, Alvaro A., 2012. "Do Low-Wage Workers React Less to Longer Unemployment Benefits? Quasi-Experimental Evidence," IZA Discussion Papers 6992, Institute for the Study of Labor (IZA).
  11. Mário Centeno & Álvaro Novo, 2009. "Reemployment wages and UI liquidity effect: a regression discontinuity approach," Portuguese Economic Journal, Springer, vol. 8(1), pages 45-52, April.
  12. Abbritti, Mirko & Fahr, Stephan, 2013. "Downward wage rigidity and business cycle asymmetries," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 871-886.
  13. Stefan Arent & Wolfgang Nagl, 2013. "Unemployment Compensation and Wages: Evidence from the German Hartz Reforms," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(4), pages 450-466, July.

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