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Do reservation wages react to regional unemployment?

Author

Listed:
  • Uwe Blien
  • Susanne Messmann
  • Mark Trappmann

Abstract

Reservation wages indicate the wage threshold for which individual workers are inclined to supply their working capacity. In important theoretical approaches it is assumed that this threshold depends on the unemployment rate. If this is true, the variation of reservation wages might be an important force behind the regional 'wage curve', which has been estimated in many empirical studies. Up to now, the connection to reservation wages has not been tested, since research are rather limited, since they depend on the availability of survey data. With the 'Labour Market and Social Security' study (PASS), a new large panel survey in Germany, information on regional reservation wages is available. PASS provides many variables usually expected to determine wages, such as gender, age, qualification etc. The data available therefore provides an excellent opportunity to test the relationship between unemployment and reservations wages. The analysis opens up the 'black box' of the wage generation process and delivers insights about its determining factors. J31, C20, R10 wage curve, reservation wage, regional labour markets

Suggested Citation

  • Uwe Blien & Susanne Messmann & Mark Trappmann, 2012. "Do reservation wages react to regional unemployment?," ERSA conference papers ersa12p662, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa12p662
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    References listed on IDEAS

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    Cited by:

    1. Hila Axelrad & Israel Luski & Miki Malul, 2017. "Reservation Wages and the Unemployment of Older Workers," Journal of Labor Research, Springer, vol. 38(2), pages 206-227, June.
    2. Soumya Basu & Anton N Isaacs, 2019. "Profile of transcultural patients in a regional Child and Adolescent Mental Health Service in Gippsland, Australia: The need for a multidimensional understanding of the complexities," International Journal of Social Psychiatry, , vol. 65(3), pages 217-224, May.
    3. Mark Trappmann & Jonas Beste & Arne Bethmann & Gerrit Müller, 2013. "The PASS panel survey after six waves [Die PASS-Panelbefragung nach sechs Wellen]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 46(4), pages 275-281, December.
    4. Trappmann, Mark & Beste, Jonas & Bethmann, Arne & Müller, Gerrit, 2013. "The PASS panel survey after six waves," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 46(4), pages 275-281.
    5. Anne Bucher & Sébastien Ménard, 2015. "The effects of firing costs on the wage contracts under adverse selection," Working Papers of BETA 2015-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    6. 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.
    7. Rokicki, Bartlomiej & Blien, Uwe & Hewings, Geoffrey J. D. & Phan thi Hong, Van, 2020. "Is there a Wage Curve with Regional Real Wages?," IAB-Discussion Paper 202017, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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