Risk aversion and reservation wages

Arbeitspapier

This study examines the relationship between individual risk aversion and reservation wages using a novel set of direct measures of individual risk attitudes from the German Socio-Economic Panel (SOEP). We find that risk aversion has a significantly negative impact on the level of reservation wages. Moreover, we show that the elasticity of the reservation wage with respect to unemployment benefits is remarkably lower for risk-averse job seekers than for risk-loving job seekers. The results are consistent with an interpretation that risk-averse job seekers set their reservation wage levels sufficiently low, so that they accept almost every job offer.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 2806

Classification and Topics

• Classification: Wirtschaft
• Subject: Arbeitsuche ; Risikoaversion ; Anspruchslohn ; Risikopräferenz ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pannenberg, Markus
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/34366
• URN: urn:nbn:de:101:1-20080401241
• Last update: 10.03.2025, 11:42 AM CET