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What Determines the Reservation Wages of Unemployed Workers? New Evidence From German Micro Data
Author:
Mr. Eswar S Prasad
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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 004
Language:
English
Publication Date:
01 Jan 2003
DOI:
https://doi.org/10.5089/9781451842067.001
ISBN:
9781451842067
ISSN:
1018-5941
Pages:
23
Keywords:
WP; reservation wage; worker; real wage; wage differential; labor supply disincentives; offer wage distribution; unemployment and employment determinants; unemployment compensation; duration variable; search costs; wage distribution; household income; reservation wage data; unemployment duration; Wages; Unemployment; Unemployment rate; Labor supply; Income
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund