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

Author/Editor: Prasad, Eswar
Publication Date: January 01, 2003
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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(s): Wages | Germany | Labor markets | Unemployment | Labor supply

Author's Keyword(s): Reservation wage | labor supply disincentives | offer wage distribution | unemployment | and employment determinants
Publication Date: January 01, 2003
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA0042003 Pages: 22
US$15.00 (Academic Rate:
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