Reservation wage related to benefit payments

Higher unemployment benefits lead to higher reservation wages, research published by the Bank of Portugal finds.

The research uses cross-country data to show that the reservation wage, which represents the lowest level of remuneration at which a worker would be willing to accept a particular job, is positively correlated with available unemployment benefits.

Repeated observations on the same individual provide scant evidence of declining reservation wages.

To read the research, click here

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