What Determines the Reservation Wages of Unemployed Workers? New Evidence From German Micro Data

January 1, 2003

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Format: Chicago

Eswar S Prasad. What Determines the Reservation Wages of Unemployed Workers? New Evidence From German Micro Data, (USA: International Monetary Fund, 2003) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides new empirical evidence on the relationship between reservation wages of unemployed workers and macroeconomic factors--including the unemployment rate and generosity of the unemployment compensation system--as well as individual-specific determinants, such as human capital proxies and length of unemployment spell. The longitudinal dataset provides an interesting perspective on how reservation wages change over time and how they correlate with accepted wage offers for workers who move from unemployment to employment. The findings shed light on the disincentive effects of the German tax and transfer system for the employment decisions of unemployed workers at different skill levels.

Subject: Income, Labor, Labor supply, National accounts, Unemployment, Unemployment rate, Wages

Keywords: Duration variable, Household income, Income, Labor supply, Labor supply disincentives, Offer wage distribution, Real wage, Reservation wage, Reservation wage data, Search costs, Unemployment, Unemployment and employment determinants, Unemployment compensation, Unemployment duration, Unemployment rate, Wage differential, Wage distribution, Wages, Worker, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/004
Stock No:

WPIEA0042003
ISBN:

9781451842067
ISSN:

1018-5941

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