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Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data

Author

Listed:
  • Sarah Brown
  • Karl Taylor

    (Department of Economics, The University of Sheffield)

Abstract

Using individual level panel data, we analyse the divergence between an unemployed individual´s reservation wage, as well as their expected wage, and their predicted market wage, focusing upon how job search activities influence the potential divergences. In addition, using propensity score matching techniques, we explore the implications of such divergences for future employment and wages. Our findings, which are consistent with job search theory, suggest that reservation wages (and expected wages) that are high relative to the predicted market wage influence both future employment and future wages.

Suggested Citation

  • 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.
    • Handle: RePEc:shf:wpaper:2008008
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    File URL: http://www.shef.ac.uk/content/1/c6/08/62/44/SERP2008008.pdf
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    References listed on IDEAS

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    Cited by:

    1. Cahit Guven & Asadul Islam, 2015. "Age at Migration, Language Proficiency, and Socioeconomic Outcomes: Evidence From Australia," Demography, Springer;Population Association of America (PAA), vol. 52(2), pages 513-542, April.
    2. Sarah Brown & Jennifer Roberts & Karl Taylor, 2010. "Reservation wages, labour market participation and health," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(3), pages 501-529, July.

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    More about this item

    Keywords

    Employment; Job Search; Reservation Wages;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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