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Do reservation wages react to regional unemployment?

Author

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  • Blien, Uwe

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Messmann, Susanne
  • Trappmann, Mark

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Abstract

"Reservation wages indicate the wage threshold for which individual workers are inclined to supply their working capacity. In important theoretical approaches it is assumed that this threshold depends on the unemployment rate. If this is true, the variation of reservation wages might be an important force behind the regional 'wage curve', which has been estimated in many empirical studies. Up to now, the connection of regional unemployment with reservation wages has not been tested, since research possibilities depend on survey data which were not available. With the 'Labour Market and Social Security' study (PASS), a new large panel survey in Germany, information on regional reservation wages is available. The empirical analysis with this data opens up the 'black box' of the wage generation process and delivers insights about its determining factors. The analysis is based on job matching and efficiency wage theory which are used to derive a relationship between unemployment and reservation wages." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Blien, Uwe & Messmann, Susanne & Trappmann, Mark, 2012. "Do reservation wages react to regional unemployment?," IAB Discussion Paper 201222, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  • Handle: RePEc:iab:iabdpa:201222
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    References listed on IDEAS

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    Cited by:

    1. Hila Axelrad & Israel Luski & Miki Malul, 2017. "Reservation Wages and the Unemployment of Older Workers," Journal of Labor Research, Springer, vol. 38(2), pages 206-227, June.
    2. Anne Bucher & Sébastien Ménard, 2015. "The effects of firing costs on the wage contracts under adverse selection," Working Papers of BETA 2015-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. 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.
    4. Rokicki, Bartlomiej & Blien, Uwe & Hewings, Geoffrey J. D. & Phan thi Hong, Van, 2020. "Is there a Wage Curve with Regional Real Wages?," IAB Discussion Paper 202017, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    Einkommenserwartung; Arbeitslosigkeit; regionale Verteilung; IAB-Haushaltspanel; Lohnkurve; Lohnfindung; regionaler Arbeitsmarkt; Effizienzlohntheorie;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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