Reservation Wages and Starting Wages

Hans van Ophem (), Joop Hartog and Peter Berkhout ()
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Hans van Ophem: University of Amsterdam
Peter Berkhout: RIGO Research Institute

No 5435, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyse a unique data set that combines reservation wage and actually paid wage for a large sample of Dutch recent higher education graduates. On average, accepted wages are almost 8% higher than reservation wages, but there is no fixed proportionality. We find that the difference between reservation wage and accepted wage is virtually random, as search theory predicts. We also find that most information contained in the accepted wage is included in the reservation wage, as one would predict if individuals are well informed about the wage structure that characterizes their labour market.

Keywords: reservation wages; starting wages; job search (search for similar items in EconPapers)
JEL-codes: J31 J69 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

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