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Reservation Wages and Labor Supply

Author

Listed:
  • Kesternich, Iris
  • Schumacher, H.
  • Siflinger, Bettina

    (Tilburg University, Center For Economic Research)

  • Valder, Franziska

Abstract

We test what survey measures of the reservation wage reveal about individual labor supply, i.e., an individual’s willingness to substitute leisure by consumption. To this end, we combine the reservation wage measure from a large labor market survey with the reservation wage for a one-hour job that we elicit in an online experiment. We find that these two measures are highly correlated. On average, the experimental reservation wage increases by 50 Cents for every Euro increase in the survey measure.

Suggested Citation

  • Kesternich, Iris & Schumacher, H. & Siflinger, Bettina & Valder, Franziska, 2018. "Reservation Wages and Labor Supply," Discussion Paper 2018-054, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:70120e32-12f5-447b-baa5-c121cc0ab693
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    References listed on IDEAS

    as
    1. Feldstein, Martin & Poterba, James, 1984. "Unemployment insurance and reservation wages," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 141-167.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. Bohm, Peter & Linden, Johan & Sonnegard, Joakim, 1997. "Eliciting Reservation Prices: Becker-DeGroot-Marschak Mechanisms vs. Markets," Economic Journal, Royal Economic Society, vol. 107(443), pages 1079-1089, July.
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    More about this item

    Keywords

    reservation wages; labor supply; search; validation of survey measures;

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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