Reservation wages, offered wages, and unemployment duration: new empirical evidence

Björn Christensen

No 1095, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper studies the reservation wages of unemployed persons and the wages offered them in Germany from 1987 to 1998, whereby special focus is placed on unemployment duration. The results of the study indicate that in contrast to reservation wages, offered wages decline considerably with duration of unemployment. This is the main reason that ratios of reserva­tion wages to offered wages increase rapidly with duration of unemploy­ment; on average, reservation wages begin to exceed offered wages after nine months of unemployment. Thus, the chance that long-term unem­ployed persons will receive a wage offer that is higher than their own reservation wage is extremely slight.

Keywords: Reservation Wages; Offered Wages; Unemployment Duration; Labour Supply (search for similar items in EconPapers)
JEL-codes: C23 E24 J22 J64 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1095

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