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Reservation wages and the earnings capacity of lone and couple mothers: Are wage expectations too high?

Author

Listed:
  • Gray, Matthew
  • Renda, Jenny

Abstract

This paper presents evidence on the extent to which non-employed mothers who would like to work are able to provide an estimate of their reservation income. There is virtually no existing Australian research on the extent to which jobseekers are able to estimate their reservation income. The paper also tests the hypothesis that unrealistic wage expectations are an important factor in explaining relatively low employment rates among mothers by comparing reservation hourly wages with the estimated earning capacity of mothers. If reservation wages are greater than what we estimate the mother would earn in the labour market, then this is likely to make it difficult to find employment.

Suggested Citation

  • Gray, Matthew & Renda, Jenny, 2006. "Reservation wages and the earnings capacity of lone and couple mothers: Are wage expectations too high?," MPRA Paper 1067, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1067
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    File URL: https://mpra.ub.uni-muenchen.de/1067/1/MPRA_paper_1067.pdf
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    References listed on IDEAS

    as
    1. David Ingles, 1998. "Overcoming Anomalies in the Interaction of Tax and Social Security," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(3), pages 271-280.
    2. Michael Keating & Simon Lambert, 1998. "Improving Incentives: Changing the Interface of Tax and Social Security," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(3), pages 281-289.
    3. Denise J. Doiron, 2003. "Is Under-Employment due to Labour Hoarding? Evidence from the Australian Workplace Industrial Relations Survey," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 306-323, September.
    4. Yi-Ping Tseng & Roger Wilkins, 2003. "Reliance on Income Support in Australia: Prevalence and Persistence," The Economic Record, The Economic Society of Australia, vol. 79(245), pages 196-217, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Employment; reservation wages; working hours;

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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