Bloemen, H. and Stancanelli, E. (2001). Individual wealth, reservation wages, and transitions into employment Journal of Labor Economics, 19(2):400--439.

Affiliated author

Hans Bloemen
Publication year

2001

Journal

Journal of Labor Economics

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We investigate the relationship between financial wealth, reservation wages, and labor market transitions. Wealth is assumed to affect the level of the reservation wage and the employment probability. We test for the validity of this assumption by estimating a simultaneous-equations model of reservation wages, labor market transitions, and wealth. The data used for the analysis relate to a sample of unemployed job searchers. We use subjective information on the reservation wage. Wealth is found to have a significantly positive impact on the reservation wage. The overall impact of wealth on the employment probability is negative though small.