What Determines the Reservation Wages of Unemployed Workers? New Evidence From German Micro Data

Author/Editor:

Eswar S Prasad

Publication Date:

January 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper provides new empirical evidence on the relationship between reservation wages of unemployed workers and macroeconomic factors--including the unemployment rate and generosity of the unemployment compensation system--as well as individual-specific determinants, such as human capital proxies and length of unemployment spell. The longitudinal dataset provides an interesting perspective on how reservation wages change over time and how they correlate with accepted wage offers for workers who move from unemployment to employment. The findings shed light on the disincentive effects of the German tax and transfer system for the employment decisions of unemployed workers at different skill levels.

Series:

Working Paper No. 03/4

Subject:

English

Publication Date:

January 1, 2003

ISBN/ISSN:

9781451842067/1018-5941

Stock No:

WPIEA0042003

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

23

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