IDEAS home Printed from https://ideas.repec.org/a/sgh/gosnar/y2015i6p51-69.html
   My bibliography  Save this article

Inferring the Adequacy of Wage Expectations Among the Non-Working

Author

Listed:
  • Paweł Strzelecki
  • Joanna Tyrowicz

Abstract

Reservation wages and expected wages constitute different categories, both conceptually and empirically. The aim of this article is the construction of a method for inferring the adequacy of both kinds of wage expectations among persons who are not employed. This method is used to verify the hypothesis about the adequacy of reservation wages and expected wages among the unemployed in Poland. The key element of the analysis in this study is to what extent the reservation wages and wage expectations of the unemployed are in alignment with market conditions. We exploit a unique source of data on expected wages (National Bank of Poland survey) as well as data on reservation wages (Labour Force Survey) and develop a series of parametric and non-parametric counterfactual distributions for the registered unemployed. Our results indicate that expected wages are higher than reservation wages and continue to be positively correlated with wage pressure. We find that reservation wages in Poland from 2011 to 2014 were not excessive. This is important because if the wage expectations of the unemployed are in excess of market evaluation, unemployment and wage pressures prevail.

Suggested Citation

  • Paweł Strzelecki & Joanna Tyrowicz, 2015. "Inferring the Adequacy of Wage Expectations Among the Non-Working," Gospodarka Narodowa, Warsaw School of Economics, issue 6, pages 51-69.
  • Handle: RePEc:sgh:gosnar:y:2015:i:6:p:51-69
    as

    Download full text from publisher

    File URL: http://gospodarkanarodowa.sgh.waw.pl/p/gospodarka_narodowa_2015_06_03.pdf
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. Myck, Michal & Nicinska, Anna & Morawski, Leszek, 2009. "Count Your Hours: Returns to Education in Poland," IZA Discussion Papers 4332, Institute for the Study of Labor (IZA).
    2. John Addison & Mário Centeno & Pedro Portugal, 2009. "Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages," Journal of Labor Research, Springer, vol. 30(1), pages 1-8, March.
    3. Hugo Ñopo, 2008. "Matching as a Tool to Decompose Wage Gaps," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 290-299, May.
    4. Guy Laroque & Bernard Salanie, 2002. "Labour market institutions and employment in France," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(1), pages 25-48.
    5. Böheim, Renè & Horvath, Gerard Thomas & Winter-Ebmer, Rudolf, 2011. "Great expectations: Past wages and unemployment durations," Labour Economics, Elsevier, vol. 18(6), pages 778-785.
    6. Baltagi, Badi H. & Blien, Uwe & Wolf, Katja, 2009. "New evidence on the dynamic wage curve for Western Germany: 1980-2004," Labour Economics, Elsevier, vol. 16(1), pages 47-51, January.
    7. Lancaster, Tony & Chesher, Andrew, 1983. "An Econometric Analysis of Reservation Wages," Econometrica, Econometric Society, vol. 51(6), pages 1661-1676, November.
    8. Andrew Newell & Mieczyslaw W. Socha, 2007. "The Polish wage inequality explosion," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15, pages 733-758, October.
    9. Alan B. Krueger & Andreas I. Mueller, 2016. "A Contribution to the Empirics of Reservation Wages," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 142-179, February.
    10. Ahn, Namkee & de la Rica, Sara & Ugidos, Arantza, 1999. "Willingness to Move for Work and Unemployment Duration in Spain," Economica, London School of Economics and Political Science, vol. 66(263), pages 335-357, August.
    11. Peter A. Diamond, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 217-227.
    12. Brown, Sarah & Taylor, Karl, 2013. "Reservation wages, expected wages and unemployment," Economics Letters, Elsevier, vol. 119(3), pages 276-279.
    13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    14. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-979, December.
    15. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-690, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Mincerian wage regression; counterfactual distribution; reservation wage; wage expectations; wage pressure; LFS;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sgh:gosnar:y:2015:i:6:p:51-69. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dariusz Nojszewski). General contact details of provider: http://edirc.repec.org/data/sgwawpl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.