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The Effect of Job Heterogeneity on Reservation Wages

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  • McCall, Brian P

Abstract

This paper develops a model of job search in which jobs differ in the amount of inspection and experience uncertainty. Under these circumstances, reservation wages may not remain constant or decrease over an unemployment spell. Even if job offer rates are constant over an unemployment spell, negative duration dependence of the reemployment hazard can occur when individuals search amongst a variety of jobs. Since this duration dependence is a result of time-varying unobserved heterogeneity, conventional methods for controlling for unobserved heterogeneity in reduced-form hazard models are inappropriate. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • McCall, Brian P, 1994. "The Effect of Job Heterogeneity on Reservation Wages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 773-791, August.
    • Handle: RePEc:ier:iecrev:v:35:y:1994:i:3:p:773-91
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    Cited by:

    1. Cysne, Rubens Penha, 2006. "On The Positive Correlation Between Income and Patience," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 60(1), January.
    2. Romeo, Charles J, 1999. "Conducting Inference in Semiparametric Duration Models under Inequality Restrictions on the Shape of the Hazard Implied by Job Search Theory," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(6), pages 587-605, Nov.-Dec..
    3. Mehmet Bac & Serife Genc, 2009. "The French first employment contract: efficient screening device or Kleenex contract?," Journal of Economics, Springer, vol. 98(1), pages 77-88, September.
    4. Mark Stater & Jeffrey B Wenger, 2017. "The Immediate Hardship of Unemployment: Evidence from the US Unemployment Insurance System," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(1), pages 17-36, January.

    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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