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Reservation Wages and the Unemployment of Older Workers

Hila Axelrad (), Israel Luski () and Miki Malul ()
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Hila Axelrad: Boston College
Israel Luski: The western Galilee College
Miki Malul: Ben-Gurion University of the Negev

Journal of Labor Research, 2017, vol. 38, issue 2, 206-227

Abstract: Abstract Our purpose is to examine the level of reservation wages among older unemployed (45+), and investigate what happens to the level of reservation wages as the length of unemployment increases. Using data from questionnaires completed by unemployed, we examined the reservation wages of 364 individuals and asked whether they would be willing to compromise in terms of their occupation, profession or geographic location to find a job. 112 of the participants responded to two questionnaires over a three-month period to determine the changes in their expectations over time. Additionally, we conducted qualitative interviews with 10 unemployed. We found that older people experienced longer periods of unemployment, and had a greater willingness to reduce salary expectations. The study establishes an innovative connection between older unemployed, reservation wages and the duration of unemployment, showing that higher reservation wages among older unemployed is the cause of prolonging their unemployment.

Keywords: Older workers; Unemployment duration; Reservation wages; Salary expectations; Relative reservation wages (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s12122-017-9247-6

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Handle: RePEc:spr:jlabre:v:38:y:2017:i:2:d:10.1007_s12122-017-9247-6