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

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  • John T. Addison
  • Mário Centeno
  • Pedro 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, repeated observations on the same individual provide scant evidence of declining reservation wages.

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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200802.

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Date of creation: 2008
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Handle: RePEc:ptu:wpaper:w200802

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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. Addison, John T. & Centeno, Mario & Portugal, Pedro, 2008. "Unemployment Benefits and Reservation Wages: Key Elasticities from a Stripped-Down Job Search Approach," IZA Discussion Papers 3357, Institute for the Study of Labor (IZA).
  3. repec:spo:wpecon:info:hdl:2441/9704 is not listed on IDEAS
  4. 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).
  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.
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Cited by:
  1. 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).
  2. Anabela Carneiro & Pedro Portugal & José Varejão, 2013. "Catastrophic Job destruction," Working Papers w201314, Banco de Portugal, Economics and Research Department.
  3. 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).
  4. 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.
  5. Humpert, Stephan & Pfeifer, Christian, 2013. "Explaining age and gender differences in employment rates : a labor supply side perspective," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(1), pages 1-17.
  6. Abbritti, Mirko & Fahr, Stephan, 2013. "Downward wage rigidity and business cycle asymmetries," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 871-886.
  7. 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.
  8. Wolfgang Nagl & Stefan Arent, 2012. "Unemployment Benefits and Wages: Evidence from the German Hartz-Reform," ERSA conference papers ersa12p78, European Regional Science Association.
  9. 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.
  10. 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.
  11. 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.

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