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The Relation between Unemployment Benefits, the Reservation Wage and Search Duration

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  • Gorter, Dirk
  • Gorter, Cees

Abstract

Stationary job search theory is used as a starting point for an empirical analysis of search durations. Data have been derived from the Dutch Socio-economic Panel and cover the period 1985-87. They are particularly interesting since the reservation wage and the conditional expected wage are observed. This makes it possible to analyze the relation between unemployment benefit, reservation wage, and search duration. It appears that other factors, such as gender and educational level, influence duration far more than the benefit and the reservation wage. A close connection is found between benefit and reservation wage (elasticity of 0.3). Copyright 1993 by Blackwell Publishing Ltd

Suggested Citation

  • Gorter, Dirk & Gorter, Cees, 1993. "The Relation between Unemployment Benefits, the Reservation Wage and Search Duration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 199-214, May.
    • Handle: RePEc:bla:obuest:v:55:y:1993:i:2:p:199-214
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    Citations

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    Cited by:

    1. Pedro Portugal & John T. Addison, 2004. "Reservation Wages, Search Duration, and Accepted Wages in Europe," Working Papers w200413, Banco de Portugal, Economics and Research Department.
    2. Brown, Alessio J.G. & Kohlbrecher, Britta & Merkl, Christian & Snower, Dennis J., 2021. "The effects of productivity and benefits on unemployment: Breaking the link," Economic Modelling, Elsevier, vol. 94(C), pages 967-980.
    3. Prasad, Eswar, 2003. "What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data," IZA Discussion Papers 694, Institute of Labor Economics (IZA).
    4. Stephan Humpert & Christian Pfeifer, 2013. "Explaining age and gender differences in employment rates: a labor supply-side perspective [Eine Erklärung alters- und geschlechtsspezifischer Unterschiede in den Beschäftigungsquoten: Die Sicht de," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 46(1), pages 1-17, March.
    5. Madhu Mohanty, 2005. "An alternative method of estimating the worker's reservation wage," International Economic Journal, Taylor & Francis Journals, vol. 19(4), pages 501-522.
    6. Bauermann, Tom, 2020. "Governmental policies to reduce unemployment during recessions: Insights from an ABM," Ruhr Economic Papers 847, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. William Collier, 2003. "The Impact of Demographic and Individual Heterogeneity on Unemployment Duration: A Regional Study," ERSA conference papers ersa03p496, European Regional Science Association.
    8. Bijlsma, Michiel & Boone, Jan & Zwart, Gijsbert, 2009. "Selective contracting and foreclosure in health care markets," CEPR Discussion Papers 7576, C.E.P.R. Discussion Papers.
    9. Marit Hinnosaar, 2003. "Reservation wages in Estonia," Bank of Estonia Working Papers 2003-1, Bank of Estonia, revised 11 Oct 2003.
    10. Vincenzo SPIEZIA, 2000. "The effects of benefits on unemployment and wages: A comparison of unemployment compensation systems," International Labour Review, International Labour Organization, vol. 139(1), pages 73-90, March.
    11. María Angeles Davia & Oscar D. Marcenaro Gutiérrez, 2008. "Exploring the link between employment search time and reservation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 186(3), pages 91-121, October.
    12. Brown, Sarah & Taylor, Karl, 2011. "Reservation wages, market wages and unemployment: Analysis of individual level panel data," Economic Modelling, Elsevier, vol. 28(3), pages 1317-1327, May.
    13. 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.
    14. Christensen, Björn, 2003. "Selektionsverzerrungen, erfragte Reservationslöhne und Arbeitslosigkeitsdauer," Kiel Working Papers 1162, Kiel Institute for the World Economy (IfW Kiel).
    15. Sarah Brown & Karl Taylor, 2008. "Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data," Working Papers 2008008, The University of Sheffield, Department of Economics, revised Jul 2008.
    16. Christensen, Björn, 2001. "The Determinants of Reservation Wages in Germany Does a Motivation Gap Exist?," Kiel Working Papers 1024, Kiel Institute for the World Economy (IfW Kiel).
    17. George Mutasa, 2012. "Disability Grant and Individual Labour Force Participation: The Case of South Africa," Working Papers 12156, University of Cape Town, Development Policy Research Unit.
    18. Sarah Brown & Karl Taylor, "undated". "Reservation Wages, Expected wages and the duration of Unemployment: evidence from British Panel data," Working Papers 2009001, The University of Sheffield, Department of Economics.
    19. María A. Davia & Óscar D. Marcenaro-Gutiérrez, 2007. "Exploring the link between employment search time and reservation wages in Southern Europe," Economic Working Papers at Centro de Estudios Andaluces E2007/13, Centro de Estudios Andaluces.
    20. Graafland, Johan J. & de Mooij, Ruud A., 1999. "Fiscal policy and the labour market: An AGE analysis," Economic Modelling, Elsevier, vol. 16(2), pages 189-219, April.
    21. Kazi Abdul, Mannan & V.V, Kozlov, 2005. "The Impact of Remittances on Labour Force in Bangladesh: An Empirical Analysis of Labour Participation and Employment," MPRA Paper 103797, University Library of Munich, Germany, revised 2005.
    22. Roland de Bruijn, 2006. "Scale Economies and Imperfect Competition in WorldScan," CPB Memorandum 140.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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