Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/72396 
Authors: 
Year of Publication: 
2003
Series/Report no.: 
Centre for Economic Research Working Paper Series No. WP03/10
Publisher: 
University College Dublin, Department of Economics, Dublin
Abstract: 
The reservation wage is an integral part of most theories of involuntary unemployment. We use panel data to examine the empirical determinants of the reservation wage - in particular the inßuence of previous wages - and consider what this implies for the evolution of the natural rate of unemployment. We Þnd that previous wages have a signiÞcant but relatively small effect on reservation wages (an elasticity between 0.15 and 0.47). We also Þnd considerable differences across genders with previous wages being more important for men and market wages being more important for women. Overall our results suggest that unemployment will adjust relatively quickly to shocks.
Subjects: 
Unemployment Duration
Wages
JEL: 
J64
E24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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