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• We study whether receiving advice improves decisions in job search problems. • Advisors recommend a reservation wage and leave a text message to their advisees. • Advisors choose a low reservation wage compared to optimal choice. • When asked for general advice, they recommend an even lower reservation wage. • This downward bias is eliminated when advice is for the starting search period. We study experimentally whether receiving advice from an experienced decision-maker improves decisions in an infinite-horizon search task where individuals typically choose a lower reservation wage than the optimal value. In the experiment, advisors complete 10 rounds of search and leave advice to their advisees who also complete 10 rounds of search after seeing the advice. We find that advisors tend to recommend a smaller reservation wage than their own lower than optimal choices. They formulate recommendation based on their reservation wage choice in the period when they accepted an offer, which is typically their lowest reservation wage choice over the search spell. Advisees follow this recommendation and choose a reservation wage that is further away from the optimal value leading to significant treatment differences between the advisors and advisees. Eliciting advice specifically for the starting period of the search round does not result in such negative effect of advice. Overall, we find that receiving advice does not facilitate the optimal choice in the search task. [ABSTRACT FROM AUTHOR]

Thousands of Turkish returnees (re)join the labour force of Turkey each year. Despite the gender pay gap, women return with new skills, which increase the chance of earning higher wages before the migration. Adopting a gender perspective, this paper investigates the effects of migration experience on labour income. The findings show that the positive effect of migration experience weakens the negative effect of gender on labour income, and marriage positively affects women's labour income. [ABSTRACT FROM AUTHOR]

The handling of unemployment is a central issue in cost–benefit analysis. Typically, the shadow price of employing an unemployed is derived by considering a marginal change in the employment constraint faced by an unemployed or rather an underemployed. In contrast, in this paper, we consider the discrete shift from unemployment to (full) employment. The result provides guidance how to estimate the social cost of recruiting otherwise unemployed to a project. It is shown that the social cost is overestimated by using the private reservation wage. The common practice of adding different cost items is shown to be flawed. [ABSTRACT FROM AUTHOR]

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Important statistical issues pervade the evaluation of training programs' effects for unemployed people. In particular, the fact that offered wages are observed and well-defined only for subjects who are employed (truncation by death), and the problem that information on the individuals' employment status and wage can be lost over time (attrition) raise methodological challenges for causal inference. We present an extended framework for simultaneously addressing the aforementioned problems, and thus answering important substantive research questions, in training evaluation observational studies with covariates, a binary treatment and longitudinal information on employment status and wage, which may be missing due to the lost to follow-up. There are two key features of this framework: we use principal stratification to properly define the causal effects of interest and to deal with nonignorable missingness, and we adopt a Bayesian approach for inference. The proposed framework allows us to answer an open issue in economics: the assessment of the trend of reservation wage over the duration of unemployment. We apply our framework to evaluate causal effects of foreign language training programs in Luxembourg, using administrative data on the labor force (IGSS-ADEM dataset). Our findings might be an incentive for the employment agencies to better design and implement future language training programs. [ABSTRACT FROM AUTHOR]

Survey measures of the reservation wage may reflect both the consumption-leisure trade-off and job market prospects (the arrival rate of job offers and the wage distribution). We examine what a survey measure of the reservation wage reveals about an individual's willingness to trade leisure for consumption. To this end, we combine the reservation wage measure from a large labor market survey with the reservation wage for a one-hour job that we elicit in an online experiment. The two measures show a strong positive association. For unemployed individuals, the experimental reservation wage increases on average by around one Euro for every Euro increase in the survey measure. For employed individuals, the association between the two measures is weaker and depends on their occupation-specific risk of unemployment. We show that these results are robust to selection into the experiment, and that demographic variables have a similar influence on both reservation wage measures. [ABSTRACT FROM AUTHOR]

Copyright of Ekonomske Ideje i Praksa is the property of Centar za Izdavacku Delatnost Ekonomskog Fakulteta u Beogradu and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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]

Copyright of Journal of Management & Labor / Yönetim ve Çalışma Dergisi is the property of Yonetim ve Calisma and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, we examine how remittances, an outcome of labor mobility, affect labor market activities in Ghana using detailed household and individual‐level data. This is important, considering the extensive literature that has documented the remittance–poverty reduction nexus. First, we find a strong negative association between household remittance‐receiving status and individual labor supply decisions using instrumental variable estimation techniques. Second, we find the depressing effect of remittances on labor supply decisions to be much stronger in rural areas. Rural women who reside in remittance‐receiving households are less likely to be in the labor force compared with those who do not reside in such households. Remittances have very little impact on labor supply decisions in urban areas. Our findings support that remittances can exacerbate long‐term poverty reduction in rural areas through lower labor force participation, and as such rural‐based and gender‐based interventions may be needed to help redirect remittance income. [ABSTRACT FROM AUTHOR]

The objectives of this study are to understand the determinants of reservation wages and measure the gap between reservation and market wages in North Macedonia. The study makes use of recently collected information on reservation wages in the Labor Force Survey 2016 and 2017. The analysis relies on ordinary least squares, propensity score matching, Heckman-corrected estimates, and panel fixed effects. The results suggest that it is mainly supply factors that shape reservation wages in the country. Higher education achievement sizably increases future wage expectations, while age and longer spells of unemployment reduce them. Demand factors are found to be insignificant for reservation wage formation. Observed by skill level, the results suggest that low-skilled individuals consistently value their skills higher than what the market offers and who set too high expectations. These circumstances are aggravated in cases where the household is well-off and/or receives remittances. By contrast, highly skilled individuals, despite maintaining a positive reservation wage gap, have a propensity to accept market wages even when they fall below their reservation wage, likely because these workers fear rapid depreciation of their skills. [ABSTRACT FROM AUTHOR]

In a simple model with hidden action, we analyze the role of nonwage benefits (perks) in the structure of incentive‐compatible contracts. We show that the provision of perks depends on the size of the agent's reservation wage. The two main results are: (a) for low levels of the reservation wage, perks are never provided by the principal, but the agent may decide to buy, as own consumption, a certain amount of private benefits; (b) for high levels, the principal may find it profitable to offer perks, and the equilibrium quantity increases more than proportionally with the reservation wage, up to the first‐best level. [ABSTRACT FROM AUTHOR]

This study examines the effect on job search behavior of changes in unemployment insurance (UI) provisions and in labor market conditions. There are good reasons for assuming, on the one hand, that more generous benefits prolong job search and, on the other hand, that an increase in the rate of unemployment causes recipients to reduce reservation wages and thus shorten their job search. Previous studies have not resolved which of these tendencies will prevail in case of a conflict. The evidence from two samples of recipients in Maine during the period 1974 - 76, when a significant increase occurred in both the rate of unemployment and the maximum weeks of potential receipt of UI, indicates that the effect of increased unemployment offsets the effect of increased benefits. The author concludes that extended benefit programs during periods of high unemployment do not cause recipients to ignore the realities of the market. [ABSTRACT FROM AUTHOR]