Unemployment duration and workers' wage aspirations in Spain
This paper examines unemployed workers' declared willingness to work for a wage lower than the one warranted by their qualification. We analyze which personal and economic characteristics determine this willingness and how it changes as unemployment spells lengthen. Moreover, we also study the influence of this willingness on unemployment duration. The main results are: (i) Young workers, those less educated and those living in regions with high unemployment show a more positive attitude towards accepting lower wages while married women with a working husband show more negative attitudes; (ii) The exhaustion of unemployment benefits has positive effects in the transition probability of the attitude from negative to positive; (iii) The effect of this attitude on the unemployment hazard rate is positive but only marginally significant which may be showing that this willingness is not only reflecting the worker's reservation wage but also some unobserved heterogeneity; (iv) The negative duration dependence of the unemployment hazard rate is substantially reduced when unobserved heterogeneity is controlled for.
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