Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data

Sarah Brown () and Karl Taylor

No 2008008, Working Papers from The University of Sheffield, Department of Economics

Abstract: Using individual level panel data, we analyse the divergence between an unemployed individual´s reservation wage, as well as their expected wage, and their predicted market wage, focusing upon how job search activities influence the potential divergences. In addition, using propensity score matching techniques, we explore the implications of such divergences for future employment and wages. Our findings, which are consistent with job search theory, suggest that reservation wages (and expected wages) that are high relative to the predicted market wage influence both future employment and future wages.

Keywords: Employment; Job Search; Reservation Wages (search for similar items in EconPapers)
JEL-codes: J13 J24 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2008-07, Revised 2008-07
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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