The Reservation Wage Unemployment Duration Nexus

Addison, J.T.; Machado, J.A.F.; Portugal, P.

Abstract

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 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.

Citation

Addison, J., Machado, J., & Portugal, P. (2013). The Reservation Wage Unemployment Duration Nexus. Oxford Bulletin of Economics and Statistics, 75(6), 980-987. https://doi.org/10.1111/j.1468-0084.2012.00717.x

• Journal Article Type: Article
• Publication Date: Dec 1, 2013
• Deposit Date: Aug 28, 2013
• Publicly Available Date: May 23, 2014
• Journal: Oxford Bulletin of Economics and Statistics
• Print ISSN: 0305-9049
• Electronic ISSN: 1468-0084
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 75
• Issue: 6
• Pages: 980-987
• DOI: https://doi.org/10.1111/j.1468-0084.2012.00717.x
• Public URL: https://durham-repository.worktribe.com/output/1471299