Kiel Working Papers, Kiel Institute for World Economics
No 1095:
Reservation Wages, Offered Wages, and Unemployment Duration ; New Empirical Evidence
Björn Christensen
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; (follow links to similar papers)
JEL-Codes: C23; E24; J22; J64; (follow links to similar papers)
25 pages, January 2002
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