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Individual Wealth, Reservation Wages, and Transitions into Employment

Hans Bloemen () and Elena Stancanelli

Sciences Po publications from Sciences Po

Abstract: We investigate the relationship between financial wealth, reservation wages, and labor market transitions. Wealth is assumed to affect the level of the reservation wage and the employment probability. We test for the validity of this assumption by estimating a simultaneous‐equations model of reservation wages, labor market transitions, and wealth. The data used for the analysis relate to a sample of unemployed job searchers. We use subjective information on the reservation wage. Wealth is found to have a significantly positive impact on the reservation wage. The overall impact of wealth on the employment probability is negative though small.

Date: 2001-04
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Published in Journal of Labor Economics, 2001, vol. 19, pp.400-439

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Related works:
Journal Article: Individual Wealth, Reservation Wages, and Transitions into Employment (2001) Downloads
Working Paper: Individual Wealth, Reservation Wages, and Transitions into Employment (2001) Downloads
Working Paper: Individual Wealth, Reservation Wages and Transitions into Employment (1997) Downloads
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