Kiel Working Papers, Kiel Institute for World Economics
No 1024:
The Determinants of Reservation Wages in Germany Does a Motivation Gap Exist?
Björn Christensen
Abstract: This paper investigates the reservation wages of
unemployed persons on the basis of a job-search model with non-static
reservation wages using panel data from Germany from 1987 to 1998. The
results suggest that reservation wages are relatively high in Germany
compared to other countries. Furthermore, pooled regression results show
that most recent wages and personal characteristics of the unemployed are
the most important determinants of reservation wages. In contrast neither
unemployment duration nor different kinds of unemployment benefits
influence reservation wages. Hence the findings corroborate the hypothesis
that unemployed persons are not subject to strong financial pressure and
thus have no significant motivation to find a new job.
Keywords: Pooled Regression, Unemployment, Labour Supply, Reservation Wages; (follow links to similar papers)
JEL-Codes: C23; E24; J22; J64; (follow links to similar papers)
50 pages, January 2001
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