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Explaining Age and Gender Differences in Employment Rates: A Labor Supply Side Perspective

  • Stephan Humpert

    ()

    (Institute of Economics, Leuphana University Lueneburg, Germany)

  • Christian Pfeifer

    ()

    (Institute of Economics, Leuphana University Lueneburg, Germany)

This paper takes a labor supply perspective (neoclassical labor supply, job search) to explain the lower employment rates of older workers and women. The basic rationale is that workers choose non-employed if their reservation wages are larger than the offered wages. Whereas the offered wages depend on workers' productivity and firms' decisions, reservation wages are largely determined by workers' endowments and preferences for leisure. To shed some empirical light on this issue, we use German survey data to analyze age and gender differences in reservation and entry wages, preferred and actual working hours, and satisfaction with leisure and work.

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Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 214.

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Length: 73 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:lue:wpaper:214
Contact details of provider: Web page: http://leuphana.de/institute/ivwl.html

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  1. Lorenzo Cappellari & Konstantinos Tatsiramos, 2010. "Friends’ Networks and Job Finding Rates," DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro ieil0059, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  2. Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008.
  3. Jennifer Hunt, 1992. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Discussion Papers of DIW Berlin 50, DIW Berlin, German Institute for Economic Research.
  4. Chan, Sewin & Stevens, Ann Huff, 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 484-521, April.
  5. Roger H. Gordon & Alan S. Blinder, 1980. "Market wages, reservation wages, and retirement decisions," NBER Chapters, in: Econometric Studies in Public Finance, pages 277-308 National Bureau of Economic Research, Inc.
  6. Sholeh A. Maani & A. H. Studenmund, 1986. "The critical wage, unemployment duration, and wage expectations: The case of Chile," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(2), pages 264-276, January.
  7. Pannenberg, Markus, 2010. "Risk attitudes and reservation wages of unemployed workers: Evidence from panel data," Economics Letters, Elsevier, vol. 106(3), pages 223-226, March.
  8. Hans Bloemen & Elena Stancanelli, 2001. "Individual Wealth, Reservation Wages, and Transitions into Employment," Sciences Po publications info:hdl:2441/9704, Sciences Po.
  9. Chang, Fwu-Ranq, 1991. "Uncertain Lifetimes, Retirement and Economic Welfare," Economica, London School of Economics and Political Science, vol. 58(230), pages 215-32, May.
  10. Kiefer, Nicholas M & Neumann, George R, 1979. "An Empirical Job-Search Model, with a Test of the Constant Reservation-Wage Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 89-107, February.
  11. Gielen, Anne C., 2007. "Working Hours Flexibility and Older Workers' Labor Supply," IZA Discussion Papers 2946, Institute for the Study of Labor (IZA).
  12. Robert Shimer & Ivan Werning, 2006. "Reservation Wages and Unemployment Insurance," NBER Working Papers 12618, National Bureau of Economic Research, Inc.
  13. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
  14. Wolfgang Franz, 1980. "The Reservation Wage of Unemployed Persons in the Federal Republic of Germany: Theory and Empirical Tests," NBER Working Papers 0578, National Bureau of Economic Research, Inc.
  15. Addison, John T. & Centeno, Mario & Portugal, Pedro, 2008. "Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages," IZA Discussion Papers 3289, Institute for the Study of Labor (IZA).
  16. Robert Hutchens, 1988. "Do job opportunities decline with age?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 89-99, October.
  17. Sarah Brown & Jennifer Roberts & Karl Taylor, 2010. "The gender reservation wage gap: evidence from British panel data," Working Papers 2010010, The University of Sheffield, Department of Economics, revised May 2010.
  18. Enswar Prasad, 2001. "The Dynamics of Reservation Wages: Preliminary Evidence from the GSOEP," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 44-50.
  19. Lars Ljungqvist & Thomas J. Sargent, 2008. "Two Questions about European Unemployment," Econometrica, Econometric Society, vol. 76(1), pages 1-29, 01.
  20. Bernd Fitzenberger & Ralf A. Wilke, 2010. "Unemployment Durations in West Germany Before and After the Reform of the Unemployment Compensation System during the 1980s," German Economic Review, Verein für Socialpolitik, vol. 11, pages 336-366, 08.
  21. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-62, December.
  22. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  23. Steiner, Viktor, 2001. " Unemployment Persistence in the West German Labour Market: Negative Duration Dependence or Sorting?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(1), pages 91-113, February.
  24. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
  25. Constant, Amelie & Krause, Annabelle & Rinne, Ulf & Zimmermann, Klaus F, 2011. "Reservation Wages of First and Second Generation Migrants," CEPR Discussion Papers 8208, C.E.P.R. Discussion Papers.
  26. Heckman, James J, 1974. "Life Cycle Consumption and Labor Supply: An Explanation of the Relationship Between Income and Consumption Over the Life Cycle," American Economic Review, American Economic Association, vol. 64(1), pages 188-94, March.
  27. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, August.
  28. Jones, Stephen R G, 1989. "Reservation Wages and the Cost of Unemployment," Economica, London School of Economics and Political Science, vol. 56(222), pages 225-46, May.
  29. Katrin Schleife, 2006. "Computer Use and Employment Status of Older Workers - An Analysis Based on Individual Data," LABOUR, CEIS, vol. 20(2), pages 325-348, 06.
  30. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
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