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Reservation wages, market wages and unemployment: Analysis of individual level panel data

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  • Brown, Sarah
  • Taylor, Karl

Abstract

Using individual level panel data, we analyse the divergence between the reservation wages of individuals who are out of work and their predicted market wages, focusing upon identifying the factors that influence the potential divergence. In addition, using propensity score matching techniques, we explore the implications of such divergences for future employment and wages. Our findings suggest that having reservation wages that are high relative to the predicted market wage influence both future employment and future wages.

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  • 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.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1317-1327
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    Cited by:

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    2. Panos Sousounis & Gauthier Lanot, 2022. "Minimum Wage Effects on Reservation Wages," Journal of Labor Research, Springer, vol. 43(3), pages 415-439, December.
    3. Dawson, Chris, 2017. "The upside of pessimism − Biased beliefs and the paradox of the contented female worker," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 215-228.
    4. Jaylson Jair Da Silveira & Gilberto Tadeu Lima, 2014. "Endogenous Labor Effort And Wage Differentials In A Dynamic Model Of Capacity Utilization And Economic Growth," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 095, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Liina Malk, 2015. "Determinants of reservation wages: empirical evidence for Estonia," Bank of Estonia Working Papers wp2014-8, Bank of Estonia, revised 20 Jan 2015.

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