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Reservation Wages and Starting Wages


  • van Ophem, Hans

    () (University of Amsterdam)

  • Hartog, Joop

    () (University of Amsterdam)

  • Berkhout, Peter

    () (RIGO Research Institute)


We analyse a unique data set that combines reservation wage and actually paid wage for a large sample of Dutch recent higher education graduates. On average, accepted wages are almost 8% higher than reservation wages, but there is no fixed proportionality. We find that the difference between reservation wage and accepted wage is virtually random, as search theory predicts. We also find that most information contained in the accepted wage is included in the reservation wage, as one would predict if individuals are well informed about the wage structure that characterizes their labour market.

Suggested Citation

  • van Ophem, Hans & Hartog, Joop & Berkhout, Peter, 2011. "Reservation Wages and Starting Wages," IZA Discussion Papers 5435, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5435

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    References listed on IDEAS

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    More about this item


    reservation wages; starting wages; job search;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other

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