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Unemployment Insurance and Reservation Wages: Evidence from Administrative Data

In: Social Insurance Programs (Trans-Atlantic Public Economics Seminar, TAPES)

Author

Listed:
  • Thomas Le Barbanchon
  • Roland Rathelot
  • Alexandra Roulet

Abstract

Although the reservation wage plays a central role in job search models, empirical evidence on the determinants of reservation wages, including key policy variables such as unemployment insurance (UI), is scarce. In France, unemployed people must declare their reservation wage to the Public Employment Service when they register to claim UI benefits. We take advantage of these rich French administrative data and of a reform of UI rules to estimate the effect of the potential benefit duration (PBD) on reservation wages and on other dimensions of job selectivity, using a difference-in-difference strategy. We cannot reject that the elasticity of the reservation wage with respect to PBD is zero. Our results are precise and we can rule out elasticities larger than 0.006. Furthermore, we do not find any significant effects of PBD on the desired number of hours, duration of labor contract and commuting time/distance. The estimated elasticity of actual benefit duration with respect to PBD of 0.3 is in line with the consensus in the literature. Exploiting a regression discontinuity design as an alternative identification strategy, we find similar results.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Thomas Le Barbanchon & Roland Rathelot & Alexandra Roulet, 2016. "Unemployment Insurance and Reservation Wages: Evidence from Administrative Data," NBER Chapters, in: Social Insurance Programs (Trans-Atlantic Public Economics Seminar, TAPES), National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:13818
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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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