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Great expectations: Reservation wages and minimum wage reform.
- Source :
-
Journal of Economic Behavior & Organization . Mar2021, Vol. 183, p397-419. 23p. - Publication Year :
- 2021
-
Abstract
- This paper is the first causal study using quasi-experimental methods to identify the effect of minimum wages on the reservation wages of non-workers. We exploit variation in regional exposure to the introduction of a high-impact minimum wage in Germany in 2015, combined with survey responses about wage acceptance thresholds of job seekers. Results show a 16% increase in reservation wages among non-employed job seekers at the low end of the distribution during the period immediately following the reform. Over time, however, wage expectations revert to pre-reform levels. Our findings are suggestive of learning during the search process and further imply that minimum wages do not necessarily result in higher short-run labor force participation, as job seekers adjust their reservation wages accordingly. [ABSTRACT FROM AUTHOR]
- Subjects :
- *RESERVATION wage
*MINIMUM wage
*REFORMS
*WAGE increases
*LABOR supply
*WAGES
Subjects
Details
- Language :
- English
- ISSN :
- 01672681
- Volume :
- 183
- Database :
- Academic Search Index
- Journal :
- Journal of Economic Behavior & Organization
- Publication Type :
- Academic Journal
- Accession number :
- 148930434
- Full Text :
- https://doi.org/10.1016/j.jebo.2021.01.006