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Unemployment Benefits and Reservation Wages: Key Elasticities from a Stripped-Down Job Search Approach

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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 exploits survey information on reservation wages and data on actual wages from the European Community Household Panel to deduce in the manner of Lancaster and Chesher (1983) additional parameters of a stylized structural search model; specifically, reservation wage and transition/duration elasticities. The informational requirements of this approach are minimal, thereby facilitating comparisons between countries. Further, its policy content is immediate insofar as the impact of unemployment benefit rules and measures increasing the arrival rate of job offers are concerned. These key elasticities are computed for the United Kingdom and eleven other European nations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3357.

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Length: 22 pages
Date of creation: Feb 2008
Date of revision:
Publication status: published in: Economica, 2010, 77 (305), 46–59
Handle: RePEc:iza:izadps:dp3357

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Related research

Keywords: probability of reemployment; unemployment benefits; arrival rate of job offers; wage offer distributions; reservation wages; accepted wages;

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References

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  1. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-76, November.
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Citations

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Cited by:
  1. Antonio Accetturo & Luigi Infante, 2013. "Skills or culture? An analysis of the decision to work by immigrant women in Italy," IZA Journal of Migration, Springer, vol. 2(1), pages 1-21, December.
  2. Markus Pannenberg, 2007. "Risk Aversion and Reservation Wages," SOEPpapers on Multidisciplinary Panel Data Research 23, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Brown, Sarah & Taylor, Karl, 2013. "Reservation wages, expected wages and unemployment," Economics Letters, Elsevier, vol. 119(3), pages 276-279.
  4. Addison, John T. & Centeno, Mario & Portugal, Pedro, 2008. "Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages," IZA Discussion Papers 3289, Institute for the Study of Labor (IZA).
  5. Sarah Brown & Karl Taylor, 2008. "Expectations, Reservation Wages And Employment: Evidence From British Panel Data," Working Papers 2008007, The University of Sheffield, Department of Economics, revised May 2008.
  6. Brown, Sarah & Taylor, Karl, 2011. "Reservation wages, market wages and unemployment: Analysis of individual level panel data," Economic Modelling, Elsevier, vol. 28(3), pages 1317-1327, May.
  7. repec:wrk:warwec:991 is not listed on IDEAS
  8. 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.
  9. Pannenberg, Markus, 2007. "Risk Aversion and Reservation Wages," IZA Discussion Papers 2806, Institute for the Study of Labor (IZA).
  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. Krebs, Tom & Scheffel, Martin, 2010. "A macroeconomic model for the evaluation of labor market reforms," ZEW Discussion Papers 10-050, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Tom Krebs & Martin Scheffel, 2013. "Macroeconomic Evaluation of Labor Market Reform in Germany," IMF Working Papers 13/42, International Monetary Fund.
  13. Sarah Brown & Karl Taylor, 2008. "Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data," Working Papers 2008008, The University of Sheffield, Department of Economics, revised Jul 2008.

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