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Illing, Hannah, Johannes F. Schmieder & Simon Trenkle (2021): The Gender Gap in Earnings Losses after Job Displacement. (IZA discussion paper 14724), Cambridge, Mass, 51 S., Anhang.

Abstract

"Existing research has shown that job displacement leads to large and persistent earnings losses for men, but evidence for women is scarce. Using administrative data from Germany, we apply an event study design in combination with propensity score matching and a reweighting technique to directly compare men and women who are displaced from similar jobs and firms. Our results show that after a mass layoff, women’s earnings losses are about 35% higher than men’s, with the gap persisting five years after job displacement. This is partly explained by a higher propensity of women to take up part-time or marginal employment following job loss, but even full-time wage losses are almost 50% (or 5 percentage points) higher for women than for men. We then show that on the household level there is no evidence of an added worker effect, independent of the gender of the job loser. Finally, we document that parenthood magnifies the gender gap sharply: while fathers of young children have smaller earnings losses than men in general, mothers of young children have much larger earnings losses than other women." (Author's abstract, IAB-Doku) ((en))

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Illing, Hannah, Johannes F. Schmieder & Simon Trenkle (2021): The Gender Gap in Earnings Losses after Job Displacement. (NBER working paper 29251), Cambridge, Mass, 51 S. DOI:10.3386/w29251

Abstract

"Existing research has shown that job displacement leads to large and persistent earnings losses for men, but evidence for women is scarce. Using administrative data from Germany, we apply an event study design in combination with propensity score matching and a reweighting technique to directly compare men and women who are displaced from similar jobs and firms. Our results show that after a mass layoff, women’s earnings losses are about 35% higher than men’s, with the gap persisting five years after job displacement. This is partly explained by a higher propensity of women to take up part-time or marginal employment following job loss, but even full-time wage losses are almost 50% (or 5 percentage points) higher for women than for men. We then show that on the household level there is no evidence of an added worker effect, independent of the gender of the job loser. Finally, we document that parenthood magnifies the gender gap sharply: while fathers of young children have smaller earnings losses than men in general, mothers of young children have much larger earnings losses than other women." (Author's abstract, IAB-Doku) ((en))

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Lichter, Andreas & Amelie Schiprowski (2020): Benefit Duration, Job Search Behavior and Re-Employment. (CESifo working paper 8194), München, 32 S.

Abstract

"This paper studies how the potential duration of unemployment benefits affects individuals’ job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance scheme in 2008, which increased the potential benefit duration from 12 to 15 months for recipients of age 50 to 54. Based on detailed survey data and difference-in-differences techniques, we estimate that one additional month of benefits reduces the number of filed applications by around 10% on average over the first two months of unemployment. Treatment effects on the reservation wage are positive but statistically insignificant. In a complementary analysis, we use social security data to investigate how the reform affected re-employment outcomes. The difference-in-differences estimates yield an elasticity of 0.24 (0.1) additional months in unemployment (nonemployment) per additional month of potential benefits. A cautious back-of-the-envelope calculation reveals substantial returns to early search effort." (Author's abstract, IAB-Doku) ((en))

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Park, Choonsung (2020): Consumption, reservation wages, and aggregate labor supply. In: Review of Economic Dynamics, Jg. 37, S. 54-80. DOI:10.1016/j.red.2020.01.002

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Kiessling, Lukas, Pia Pinger, Philipp Seegers & Jan Bergerhoff (2019): Gender differences in wage expectations. Sorting, children, and negotiation styles. (IZA discussion paper 12522), Bonn, 50 S.

Abstract

"This paper presents evidence from a large-scale study on gender differences in expected wages before labor market entry. Based on data for over 15,000 students, we document a significant and large gender gap in wage expectations that closely resembles actual wage differences, prevails across subgroups, and along the entire distribution. To understand the underlying causes and determinants, we relate expected wages to sorting into majors, industries, and occupations, child-rearing plans, perceived and actual ability, personality, perceived discrimination, and negotiation styles. Our findings indicate that sorting and negotiation styles affect the gender gap in wage expectations much more than prospective child-related labor force interruptions. Given the importance of wage expectations for labor market decisions, household bargaining, and wage setting, our results provide an explanation for persistent gender inequalities." (Author's abstract, IAB-Doku) ((en))

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Conlon, John, J. Laura Pilossoph, Matthew Wiswall & Basit Zafar (2018): Labor market search with imperfect information and learning. (NBER working paper 24988), Cambrige, Mass., 65 S. DOI:10.3386/w24988

Abstract

"We investigate the role of information frictions in the US labor market using a new nationally representative panel dataset on individuals' labor market expectations and realizations. We find that expectations about future job offers are, on average, highly predictive of actual outcomes. Despite their predictive power, however, deviations of ex post realizations from ex ante expectations are often sizable. The panel aspect of the data allows us to study how individuals update their labor market expectations in response to such shocks. We find a strong response: an individual who receives a job offer one dollar above her expectation subsequently adjusts her expectations upward by $0.47. The updating patterns we document are, on the whole, inconsistent with Bayesian updating. We embed the empirical evidence on expectations and learning into a model of search on- and off- the job with learning, and show that it is far better able to fit the data on reservation wages relative to a model that assumes complete information. The estimated model indicates that workers would have lower employment transition responses to changes in the value of unemployment through higher unemployment benefits than in a complete information model, suggesting that assuming workers have complete information can bias estimates of the predictions of government interventions. We use the framework to gauge the welfare costs of information frictions which arise because individuals make uninformed job acceptance decisions and find that the costs due to information frictions are sizable, but are largely mitigated by the presence of learning." (Author's abstract, IAB-Doku) ((en))

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Fedorets, Alexandra, Alexey Filatov & Cortnie Shupe (2018): Great expectations: reservation wages and the minimum wage reform. (SOEPpapers on multidisciplinary panel data research at DIW Berlin 968), Berlin, 12 S.

Abstract

"We use the German Socio-Economic Panel to show that introducing a high-impact statutory minimum wage causes an increase in reservation wages of approximately 4 percent at the low end of the distribution. The shifts in reservation wages and observed wages due to the minimum wage reform are comparable in their magnitude. Additional results show that German citizens adjust their reservation wages more than immigrants. Moreover, suggestive evidence points to a compensation mechanism in which immigrants trade wage growth against job security." (Author's abstract, IAB-Doku) ((en))

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Hall, Robert E. & Andreas I. Mueller (2018): Wage dispersion and search behavior : The importance of nonwage job values. In: Journal of Political Economy, Jg. 126, H. 4, S. 1594-1637. DOI:10.1086/697739

Abstract

"We use a rich new body of data on the experiences of unemployed job seekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the job seekers made. We identify the distributions of four key variables: offered wages, offered nonwage job values, job seekers' nonwork alternatives, and job seekers' personal productivities. We find that, conditional on personal productivity, the standard deviation of offered log wages is moderate, at 0.24, whereas the dispersion of the offered nonwage component is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38." (Author's abstract, IAB-Doku) ((en))

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Jäger, Simon, Benjamin Schoefer, Samuel Young & Josef Zweimüller (2018): Wages and the value of nonemployment. (CESifo working paper 7342), München, 113 S.

Abstract

"Nonemployment is often posited as a worker's outside option in wage setting models such as bargaining and wage posting. The value of this state is therefore a fundamental determinant of wages and, in turn, labor supply and job creation. We measure the effect of changes in the value of nonemployment on wages in existing jobs and among job switchers. Our quasi-experimental variation in nonemployment values arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit levels: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than 0.03. In contrast, a calibrated Nash bargaining model predicts a sensitivity of 0.39 - more than ten times larger. The empirical insensitivity holds even among workers with a priori low bargaining power, with low labor force attachment, with high predicted unemployment duration, among job switchers and recently unemployed workers, in areas of high unemployment, in firms with flexible pay policies, and when considering firmlevel bargaining. The insensitivity of wages to the nonemployment value we document presents a puzzle to widely used wage setting protocols, and implies that nonemployment may not constitute workers' relevant threat point. Our evidence supports wage-setting mechanisms that insulate wages from the value of nonemployment." (Author's abstract, IAB-Doku) ((en))

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Mueller, Andreas I., Johannes Spinnewijn & Giorgio Topa (2018): Job seekers' perceptions and employment prospects. Heterogeneity, duration dependence and bias. (NBER working paper 25294), Cambrige, Mass., 71 S. DOI:10.3386/w25294

Abstract

"This paper analyses job seekers' perceptions and their relationship to unemployment outcomes to study heterogeneity and duration-dependence in both perceived and actual job finding. Using longitudinal data from two comprehensive surveys, we document (1) that reported beliefs have strong predictive power of actual job finding, (2) that job seekers are over-optimistic in their beliefs, particularly the long-term unemployed, and (3) that job seekers do not revise their beliefs downward when remaining unemployed. We then develop a reduced-form statistical framework, where we exploit the joint observation of beliefs and ex-post realizations, to disentangle heterogeneity and duration-dependence in true job finding rates while allowing for elicitation errors and systematic biases in beliefs. We find a substantial amount of heterogeneity in true job finding rates, accounting for more than half of the observed decline in job finding rates over the spell of unemployment. Moreover, job seekers' beliefs are systemically biased and under-respond to differences in job finding rates both across job seekers and over the unemployment spell. Finally, we show theoretically and quantify in a calibrated model of job search how these biases in beliefs contribute to the slow exit out of unemployment. The biases jointly explain about 15 percent of the high incidence of long-term unemployment." (Author's abstract, IAB-Doku) ((en))

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Axelrad, Hila, Israel Luski & Miki Malul (2017): Reservation wages and the unemployment of older workers. In: Journal of labor research, Jg. 38, H. 2, S. 206-227. DOI:10.1007/s12122-017-9247-6

Abstract

"Our purpose is to examine the level of reservation wages among older unemployed (45+), and investigate what happens to the level of reservation wages as the length of unemployment increases. Using data from questionnaires completed by unemployed, we examined the reservation wages of 364 individuals and asked whether they would be willing to compromise in terms of their occupation, profession or geographic location to find a job. 112 of the participants responded to two questionnaires over a three-month period to determine the changes in their expectations over time. Additionally, we conducted qualitative interviews with 10 unemployed. We found that older people experienced longer periods of unemployment, and had a greater willingness to reduce salary expectations. The study establishes an innovative connection between older unemployed, reservation wages and the duration of unemployment, showing that higher reservation wages among older unemployed is the cause of prolonging their unemployment." (Author's abstract, © Springer-Verlag) ((en))

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Beste, Jonas & Mark Trappmann (2017): Analysen zu Stellenbesetzungsproblemen: Konzessionsbereitschaft, Reservationslohn und Suchwege von Arbeitssuchenden. In: IAB-Forum H. 13.07.2017, o. Sz.

Abstract

"Aus Daten des Panels 'Arbeitsmarkt und soziale Sicherung' (PASS) geht hervor, dass viele Arbeitslose verglichen mit Beschäftigten eine hohe Bereitschaft zeigen, bei der Aufnahme einer Erwerbstätigkeit Zugeständnisse zu machen. Sie sind nach eigener Auskunft vor allem dazu bereit, eine Tätigkeit unterhalb des eigenen fachlichen Könnens oder zu ungünstigen Arbeitszeiten anzunehmen. Die Konzessionsbereitschaft hängt dabei stark von der Familiensituation ab. Alleinstehende Arbeitslose weisen gegenüber Personen in anderen Familienkonstellationen zum Beispiel eine höhere Mobilitätsbereitschaft auf." (Autorenreferat, IAB-Doku)

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Constant, Amelie F., Annabelle Krause, Ulf Rinne & Klaus F. Zimmermann (2017): Reservation wages of first- and second-generation migrants. In: Applied Economics Letters, Jg. 24, H. 13, S. 945-949. DOI:10.1080/13504851.2016.1243203

Abstract

"We analyse the reservation wages of first- and second-generation migrants, based on rich survey data of the unemployed in Germany. Our results confirm the hypothesis that reservation wages increase over migrant generations and over time, suggesting that the mobility benefit of immigration may be limited in time." (Author's abstract, IAB-Doku) ((en))

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Fackler, Daniel, Steffen Müller & Jens Stegmaier (2017): Explaining wage losses after job displacement: Employer size and lost firm rents. (IWH-Diskussionspapiere 2017,32), Halle, 46 S.

Abstract

"Why does job displacement, e.g., following import competition, technological change, or economic downturns, result in permanent wage losses? The job displacement literature is silent on whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We therefore estimate losses in wages and firm wage premiums. Premiums are measured as firm effects from a two-way fixed-effects approach, as described in Abowd, Kramarz, and Margolis (1999). Using German administrative data, we find that wage losses are, on average, fully explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses in wages and premiums are minor for workers displaced from small plants and strongly increase with pre-displacement firm size, which provides an explanation for the large and persistent wage losses that have been found in previous studies mostly focusing on displacement from large employers." (Autorenreferat, IAB-Doku)

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Le Barbanchon, Thomas, Roland Rathelot & Alexandra Roulet (2017): Unemployment insurance and reservation wages. Evidence from administrative data. (NBER working paper 23406), Cambrige, Mass., 38 S. DOI:10.3386/w23406

Abstract

"Although the reservation wage plays a central role in job search models, empirical evidence on the determinants of reservation wages, including key policy variables such as unemployment insurance (UI), is scarce. In France, unemployed people must declare their reservation wage to the Public Employment Service when they register to claim UI benefits. We take advantage of these rich French administrative data and of a reform of UI rules to estimate the effect of the potential benefit duration (PBD) on reservation wages and on other dimensions of job selectivity, using a difference-in-difference strategy. We cannot reject that the elasticity of the reservation wage with respect to PBD is zero. Our results are precise and we can rule out elasticities larger than 0.006. Furthermore, we do not find any significant effects of PBD on the desired number of hours, duration of labor contract and commuting time/distance. The estimated elasticity of actual benefit duration with respect to PBD of 0.3 is in line with the consensus in the literature. Exploiting a regression discontinuity design as an alternative identification strategy, we find similar results." (Author's abstract, IAB-Doku) ((en))

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Scheve, Christian von, Frederike Esche & Jürgen Schupp (2017): The emotional timeline of unemployment. Anticipation, reaction, and adaptation. In: Journal of happiness studies, Jg. 18, H. 4, S. 1231-1254. DOI:10.1007/s10902-016-9773-6

Abstract

"Unemployment continues to be one of the major challenges in industrialized societies. Aside from its economic and societal repercussions, questions concerning the subjective experience of unemployment have recently attracted increasing attention. Although existing studies have documented the detrimental effects of unemployment for cognitive (life satisfaction) and affective well-being, studies directly comparing these two dimensions of subjective well-being and their temporal dynamics in anticipation of and response to unemployment are absent from the literature. Using longitudinal data of the German Socio-Economic Panel (SOEP) and applying fixed effects regressions, we investigate changes in cognitive and affective well-being prior to and after job loss. Extending previous studies, we use discrete emotion measures instead of affect balance indicators to assess affective well-being. Our results support existing findings that unemployment leads to decreases in life satisfaction and that the unemployed do not adapt towards previous levels of life satisfaction. We also find that individuals more often experience sadness and anxiety, and less often happiness when transitioning into unemployment. Importantly, changes in affective well-being are less enduring compared to the changes in life satisfaction." (Author's abstract, IAB-Doku) ((en))

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Soerensen, Kenneth Lykke (2017): Active labour market programmes and reservation wages. It is a hazard. In: Applied Economics Letters, Jg. 24, H. 9, S. 589-593. DOI:10.1080/13504851.2016.1213358

Abstract

"This article uses a randomized controlled trial to show that positive earnings effects of a labour market programme can be caused by either a faster return to employment together with a lowering of reservation wages or a more moderate return to employment together with an increase in reservation wages. I model wages and unemployment duration simultaneously in a hazard framework allowing for unobserved heterogeneity." (Author's abstract, IAB-Doku) ((en))

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Alonso-Borrego, César & Antonio Romero-Medina (2016): Wage expectations for higher education students in Spain. In: Labour, Jg. 30, H. 1, S. 1-17. DOI:10.1111/labr.12072

Abstract

"We assess students' ability to forecast future earnings by using data on expected wages self-reported by college students with different graduation horizons. We find a significant gender gap, by which wage expectations are systematically lower for women than for men. However, women do not fully account for the gender gap in their future earnings. We also find that student performance, degree type, and graduation horizon play a relevant role in wage forecasts. In any case, students' expectations do not conform market wages but become more realistic as they approach graduation." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Bauer, Anja (2016): Reallocation patterns across occupations in Germany. In: Economics Letters, Jg. 148, H. November, S. 111-114., 2016-09-11. DOI:10.1016/j.econlet.2016.09.008

Abstract

"Using high-quality German administrative data, I analyze workers' opportunity costs of reallocation across occupations by measuring the additional time spent in unemployment before being hired in a new occupation. Furthermore, I inspect the wage changes after reallocation and find that workers who change occupations through unemployment face wage losses that appear to be persistent over a 5-year horizon." (Author's abstract, © 2016 Elsevier) ((en))

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Cardoso, Ana Rute, Annalisa Loviglio & Lavinia Piemontese (2016): Misperceptions of unemployment and individual labor market outcomes. In: IZA journal of labor policy, Jg. 5, S. 1-22. DOI:10.1186/s40173-016-0069-6

Abstract

"We analyze the impact of misperceptions of the unemployment rate on individual wages, using the European Social Survey. We follow a threefold strategy to tackle potential endogeneity problems, as the model includes the following: controls for worker's ability, the regional unemployment rate, and country fixed effects. We estimate interval regression models. When subjective perceptions overstate the country unemployment rate, a one percentage point gap between the perceived and the actual rates reduces wages by 0.4 to 0.7 %. We discuss a potential mechanism. A pessimistic view of the labor market leads to concern over own employment prospects, lowering perceived bargaining power and reservation wages." (Author's abstract, IAB-Doku) ((en))