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Reservation Wages and Their Labor Market Effects for Black and White Male Youth


  • Harry J. Holzer


This paper presents an empirical analysis of self-reported reservation wages for unemployed young black and white males. The results show that young blacks seek wages which are comparable to those of young whites in absolute terms, but which are higher relative to what is available on the demand side of the market. These relatively higher reservation wages of young blacks contribute to their unemployment durations and somewhat to their subsequently received wages. Changes in reservation wages may thus help to explain the trends in wages and employment of young blacks in recent years.

Suggested Citation

  • Harry J. Holzer, 1986. "Reservation Wages and Their Labor Market Effects for Black and White Male Youth," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 157-177.
  • Handle: RePEc:uwp:jhriss:v:21:y:1986:i:2:p:157-177

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    References listed on IDEAS

    1. Burkhauser, Richard V & Smeeding, Timothy M & Merz, Joachim, 1996. "Relative Inequality and Poverty in Germany and the United States Using Alternative Equivalence Scales," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 381-400, December.
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    Cited by:

    1. 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.
    2. Burda, Michael C & Genadek, Katie R. & Hamermesh, Daniel S., 2015. "Not Working At Work: Loafing, Unemployment and Labor Productivity," CEPR Discussion Papers 10712, C.E.P.R. Discussion Papers.
    3. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-333, April.
    4. Julio J. Rotemberg, 2012. "Prominent Job Advertisements, Group Learning and Wage Dispersion," NBER Working Papers 18638, National Bureau of Economic Research, Inc.
    5. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    6. Koenig, Felix & Manning, Alan & Petrongolo, Barbara, 2014. "Reservation wages and the wage flexibility puzzle," LSE Research Online Documents on Economics 60613, London School of Economics and Political Science, LSE Library.
    7. Mark Stater & Jeffrey B Wenger, 2017. "The Immediate Hardship of Unemployment: Evidence from the US Unemployment Insurance System," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(1), pages 17-36, January.
    8. Luttmer Erzo F.P., 2007. "Does the Minimum Wage Cause Inefficient Rationing?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-42, October.
    9. Alexandre Mas & Amanda Pallais, 2017. "Labor Supply and the Value of Non-Work Time: Experimental Estimates from the Field," NBER Working Papers 23906, National Bureau of Economic Research, Inc.
    10. repec:cep:cepdps:dp1319 is not listed on IDEAS
    11. Kenneth Couch & Robert Fairlie, 2010. "Last hired, first fired? black-white unemployment and the business cycle," Demography, Springer;Population Association of America (PAA), vol. 47(1), pages 227-247, February.
    12. Keith A. Bender & John Douglas Satun, 2009. "Constrained By Hours And Restricted In Wages: The Quality Of Matches In The Labor Market," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 512-529, July.
    13. Elisa Guglielminetti & Rafael Lalive & Philippe Ruh & Etienne Wasmer, 2015. "Spatial search strategies of job seekers and the role of unemployment insurance," Sciences Po publications info:hdl:2441/4n249fe9fu9, Sciences Po.
    14. Tricia Gladden & Michelle Alexopoulos, 2004. "The Effects of Wealth, and Unemployment Benefits on Search Behavior and Labor Market Transitions," Econometric Society 2004 North American Summer Meetings 517, Econometric Society.
    15. H. J. Holzer & S. Danziger, "undated". "Are Jobs Available for Disadvantaged Workers in Urban Areas?," Institute for Research on Poverty Discussion Papers 1157-98, University of Wisconsin Institute for Research on Poverty.
    16. John Ameriks & Joseph S. Briggs & Andrew Caplin & Minjoon Lee & Matthew D. Shapiro & Christopher Tonetti, 2017. "Older Americans Would Work Longer If Jobs Were Flexible," NBER Working Papers 24008, National Bureau of Economic Research, Inc.
    17. Donald Haurin & Kala Sridhar, 2003. "The impact of local unemployment rates on reservation wages and the duration of search for a job," Applied Economics, Taylor & Francis Journals, vol. 35(13), pages 1469-1476.
    18. Robert Wagmiller, 2007. "Race and the spatial segregation of jobless men in urban America," Demography, Springer;Population Association of America (PAA), vol. 44(3), pages 539-562, August.
    19. Winter-Ebmer, Rudolf, 1998. "Unknown wage offer distribution and job search duration," Economics Letters, Elsevier, vol. 60(2), pages 237-242, August.
    20. Sridhar, Kala Seetharam, 2000. "Tax Incentive Programs and Unemployment Rate," The Review of Regional Studies, Southern Regional Science Association, vol. 30(3), pages 275-298, Winter.
    21. Paolo Sestito & Eliana Viviano, 2011. "Reservation Wages: Explaining Some Puzzling Regional Patterns," LABOUR, CEIS, vol. 25(1), pages 63-88, March.
    22. Dawkins, Casey J. & Shen, Qing & Sanchez, Thomas W., 2005. "Race, space, and unemployment duration," Journal of Urban Economics, Elsevier, vol. 58(1), pages 91-113, July.

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