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Reservation wages, expected wages and unemployment

Author

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  • Brown, Sarah
  • Taylor, Karl

Abstract

We model unemployment duration, reservation and expected wages simultaneously for individuals not in work, where wage expectations are identified via an exogenous policy shock. The policy shock increased expected wages, which were found to be positively associated with reservation wages.

Suggested Citation

  • Brown, Sarah & Taylor, Karl, 2013. "Reservation wages, expected wages and unemployment," Economics Letters, Elsevier, vol. 119(3), pages 276-279.
    • Handle: RePEc:eee:ecolet:v:119:y:2013:i:3:p:276-279
    DOI: 10.1016/j.econlet.2013.02.035
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    References listed on IDEAS

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    1. John T. Addison & Mário 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, January.
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    5. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
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    Cited by:

    1. Mattia Guerini & Patrick Musso & Lionel Nesta, 2020. "Estimation of Threshold Distributions for Market Participation," Documents de Travail de l'OFCE 2020-15, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Leibing, Andreas & Peter, Frauke & Waights, Sevrin & Spiess, C. Katharina, 2023. "Gender gaps in early wage expectations," Economics of Education Review, Elsevier, vol. 94(C).
    3. Brown, Sarah & Taylor, Karl, 2015. "The reservation wage curve: Evidence from the UK," Economics Letters, Elsevier, vol. 126(C), pages 22-24.
    4. Bauermann, Tom, 2020. "Governmental policies to reduce unemployment during recessions: Insights from an ABM," Ruhr Economic Papers 847, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Moshe A. Barach & John Horton, 2017. "How Do Employers Use Compensation History?: Evidence from a Field Experiment," CESifo Working Paper Series 6559, CESifo.
    6. Gutknecht, Daniel, 2016. "Testing for monotonicity under endogeneity," Journal of Econometrics, Elsevier, vol. 190(1), pages 100-114.
    7. Christoph S. Weber, 2020. "The unemployment effect of central bank transparency," Empirical Economics, Springer, vol. 59(6), pages 2947-2975, December.
    8. Fedorets, Alexandra & Shupe, Cortnie, 2021. "Great expectations: Reservation wages and minimum wage reform," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 397-419.
    9. Haroon Bhorat & Tara Caetano & Benjamin Jourdan & Ravi Kanbur & Christopher Rooney & Benjamin Stanwix & Ingrid Woolard, 2016. "Investigating the Feasibility of a National Minimum Wage for South Africa," Working Papers 201601, University of Cape Town, Development Policy Research Unit.
    10. repec:hal:spmain:info:hdl:2441/4pvhvr61db8bcq9dfr66mk2evu is not listed on IDEAS
    11. Panos Sousounis & Gauthier Lanot, 2022. "Minimum Wage Effects on Reservation Wages," Journal of Labor Research, Springer, vol. 43(3), pages 415-439, December.
    12. Alan G. Isaac, 2019. "Exploring the Social-Architecture Model," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(4), pages 565-589, October.
    13. Dawson, Chris, 2017. "The upside of pessimism − Biased beliefs and the paradox of the contented female worker," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 215-228.
    14. Frenkel Michael & Stadtmann Georg & Zimmermann Lilli, 2023. "Labor market effects of COVID-19 shocks," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 59(1), pages 3-12, March.
    15. Lanfang Deng & Hongyi Li & Wei Shi, 2022. "Willingness for different job mobility types and wage expectations: An empirical analysis based on the online resumes," Papers in Regional Science, Wiley Blackwell, vol. 101(1), pages 135-161, February.
    16. Tani, Massimiliano & Valentine, Andrew & Sharpe, Kieran, 2022. "The Gender Pay Gap in the CEOs' Labor Market," IZA Discussion Papers 15781, Institute of Labor Economics (IZA).
    17. Seonho Shin, 2022. "To work or not? Wages or subsidies?: Copula-based evidence of subsidized refugees’ negative selection into employment," Empirical Economics, Springer, vol. 63(4), pages 2209-2252, October.
    18. Jaylson Jair Da Silveira & Gilberto Tadeu Lima, 2014. "Endogenous Labor Effort And Wage Differentials In A Dynamic Model Of Capacity Utilization And Economic Growth," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 095, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    19. Paweł Strzelecki & Joanna Tyrowicz, 2015. "Inferring the Adequacy of Wage Expectations Among the Non-Working," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 6, pages 51-69.
    20. Guerini, Mattia & Musso, Patrick & Nesta, Lionel, 2021. "Can you jump this high? Quantifying barriers to market participation," Economic Modelling, Elsevier, vol. 98(C), pages 192-217.
    21. Liina Malk, 2015. "Determinants of reservation wages: empirical evidence for Estonia," Bank of Estonia Working Papers wp2014-8, Bank of Estonia, revised 20 Jan 2015.

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    More about this item

    Keywords

    Expected wages; Reservation wages; Unemployment duration;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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