Arbeitspapier
The reservation wage unemployment duration nexus
A thorny problem in identifying the determinants of reservation wages and particularly the role of continued joblessness in their evolution is the simultaneity issue. We deploy a natural control function approach to the problem that involves conditioning elapsed duration on completed unemployment duration in the reservation wage equation. Our analysis confirms that the use of elapsed duration alone compounds two separate and opposing influences. Only with the inclusion of completed duration is the negative effect of continued joblessness on reservation wages apparent. For its part, the completed duration coefficient suggests that higher reservation wages negatively influence the probability of exiting unemployment.
- Language
-
Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 5077
- Classification
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Wirtschaft
Unemployment: Models, Duration, Incidence, and Job Search
Unemployment Insurance; Severance Pay; Plant Closings
- Subject
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reservation wages
unemployment duration
control function
- Event
-
Geistige Schöpfung
- (who)
-
Addison, John T.
Machado, José A. F.
Portugal, Pedro
- Event
-
Veröffentlichung
- (who)
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Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Addison, John T.
- Machado, José A. F.
- Portugal, Pedro
- Institute for the Study of Labor (IZA)
Time of origin
- 2010
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How does the unemployment insurance system shape the time profile of jobless duration?
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