Unemployment Benefits and Reservation Wages: Key Elasticities from a Stripped-Down Job Search Approach

John Addison (), Mário Centeno () and Pedro Portugal

No 3357, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper exploits survey information on reservation wages and data on actual wages from the European Community Household Panel to deduce in the manner of Lancaster and Chesher (1983) additional parameters of a stylized structural search model; specifically, reservation wage and transition/duration elasticities. The informational requirements of this approach are minimal, thereby facilitating comparisons between countries. Further, its policy content is immediate insofar as the impact of unemployment benefit rules and measures increasing the arrival rate of job offers are concerned. These key elasticities are computed for the United Kingdom and eleven other European nations.

Keywords: arrival rate of job offers; wage offer distributions; reservation wages; accepted wages; probability of reemployment; unemployment benefits (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-ltv
Date: 2008-02
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Forthcoming in: Economica, 2008

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