An alternative method of estimating the worker's reservation wage

Madhu Mohanty

International Economic Journal, 2005, vol. 19, issue 4, 501-522

Abstract: This study follows the standard bivariate decision theory of employment and proposes an alternative technique to estimate reservation wages of employed, unemployed and out-of-labor-force (OLF) workers. The validity of this approach is demonstrated by testing several reservation wage hypotheses recommended in earlier studies. Using reservation wages estimated under this new approach, the study further examines the determinants of this important variable.

Keywords: Reservation wages; bivariate probit; selection bias; participation decision (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/10168730500382170

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