More rooftop-ready results on reservation wages

These are from Alan Krueger and Andreas Muller (pdf):

This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and spring of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) the self-reported reservation wage predicts whether a job offer is accepted or rejected; (3) the reservation wage is remarkably stable over the course of unemployment for most workers, with the notable exception of workers who are over age 50 and those who had nontrivial savings at the start of the study; (4) many workers who seek full-time work will accept a part-time job that offers a wage below their reservation wage; and (5) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).

Here is a popular summary of some of the results, including the recommended Figure 4.1 (p. 47 in the paper):

… today’s job seekers seem more picky. According to an analysis of surveys of 6,000 job seekers, the minimum wages that the unemployed are willing to accept are very close to their previous salary and drop little over time, says Mr. Mueller. That could help explain in part why they have so much trouble finding work, he says.

I conclude that some people aren’t very good at looking for jobs and further some people are not very good at accepting job offers.

This paper has many other excellent points and results, see for instance pp.27-29.

For the pointer I thank the excellent Andrew Sweeney.


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