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Reservation Wages and Labor Supply

Iris Kesternich (), H. Schumacher, Bettina Siflinger and Franziska Valder
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Bettina Siflinger: Tilburg University, Center For Economic Research

No 2018-054, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We test what survey measures of the reservation wage reveal about individual labor supply, i.e., an individual’s willingness to substitute leisure by consumption. To this end, we combine the reservation wage measure from a large labor market survey with the reservation wage for a one-hour job that we elicit in an online experiment. We find that these two measures are highly correlated. On average, the experimental reservation wage increases by 50 Cents for every Euro increase in the survey measure.

Keywords: reservation wages; labor supply; search; validation of survey measures (search for similar items in EconPapers)
JEL-codes: C83 C91 J22 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-exp
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