EconPapers    
Economics at your fingertips  
 

Reservation Wages and Work Arrangements: Evidence From The American Life Panel

Michael Papadopoulos
Additional contact information
Michael Papadopoulos: Schwartz Center for Economic Policy Analysis (SCEPA), http://www.economicpolicyresearch.org

No 2020-01, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: This study relates the rise of alternative work arrangements, particularly among older workers, with low reservation wages, a result of low bargaining power brought on by decreased attachment to career jobs and growing retirement income inadequacy. I utilize a linked sample between the RAND-Princeton Contingent Worker Survey and the American Life Panel's Health and Retirement Study, to estimate reservation wages via a two step process. I first estimate market wages on offer for non-employed people, then estimate the gap between market and reservation wages via a probit explaining probability of employment. I first confirm that my estimations for reservation wages follow expected patterns as exemplified in Hofler and Murphy (1995)'s “seven tests.†I then show that work in alternative work arrangements (on-call, temp agency, contract firm and gig work) is associated with a decrease in reservation wages of $4.47- $4.53 per hour, whereas work as an independent contractor or self-employed worker is associated with increased reservation wages by $3.72-$3.89 per hour. Whereas prior literature focuses on firm-centric explanations for an increase in alternative work, these findings point to supply-side factors which also contribute to an increase. Proposals to reform established surveys to better track work arrangements and policies to increase financial preparedness for retirement are discussed.

Keywords: alternative work; bargaining power; retirement; wages; labor (search for similar items in EconPapers)
JEL-codes: E24 J29 J30 J31 J38 J81 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-age and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.economicpolicyresearch.org/images/repo ... los_Cover_and_WP.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:epa:cepawp:2020-01

Access Statistics for this paper

More papers in SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School Contact information at EDIRC.
Bibliographic data for series maintained by Bridget Fisher ().

 
Page updated 2023-02-02
Handle: RePEc:epa:cepawp:2020-01