• Please log in or register to access this feature.

The Reservation Wage Unemployment Duration Nexus†

  1. John T. Addison1,
  2. José A. F. Machado2,
  3. Pedro Portugal3

Article first published online: 18 AUG 2012

DOI: 10.1111/j.1468-0084.2012.00717.x

Additional Information

How to Cite

Addison, J. T., Machado, J. A. F. and Portugal, P. (2012), The Reservation Wage Unemployment Duration Nexus. Oxford Bulletin of Economics and Statistics. doi: 10.1111/j.1468-0084.2012.00717.x

Author Information

  1. 1

    Department of Economics, Moore School of Business, University of South Carolina, 1705 College Street, Columbia, SC 29208, USA, (e-mail: ecceaddi@moore.sc.edu)

  2. 2

    NOVA School of Business and Economics, Lisboa, Portugal, (e-mail: jafm@novasbe.pt)

  3. 3

    Banco de Portugal and NOVA School of Business and Economics. Lisboa, Portugal, (e-mail: pportugal@bportugal.pt)

  1. †

    The authors are especially indebted to an anonymous referee for helpful comments on earlier drafts of this article.

Publication History

  1. Article first published online: 18 AUG 2012
  2. Final Manuscript Received: June 2012

SEARCH

SEARCH BY CITATION

ARTICLE TOOLS

View Full Article (HTML) Get PDF (446K)

Keywords:

  • J64;
  • J65

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.

View Full Article (HTML) Get PDF (446K)