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Author: Voeks, Lisa Ann Ford
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Voeks, Lisa Ann Ford |
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Reservation Wage, Job-Search Behavior, and Labor Turnover: A Stochastic-Frontier Approach Ph.D. Dissertation, University of Georgia, 2000 Cohort(s): NLSY79 Publisher: UMI - University Microfilms, Bell and Howell Information and Learning Keyword(s): Labor Economics; Labor Turnover; Modeling; Modeling, Multilevel; Quits; Simultaneity; Wage Equations; Wages, Reservation The concept of the reservation wage plays an important role in theories of job search and labor turnover. The reservation wage is defined as the lowest wage necessary to induce someone to accept an offer of employment. Since the reservation wage is not directly observed, previous studies of its determinants and effects have either used a survey-reported measure or have inferred the reservation wage from estimates of an average wage equation. However, the former is widely believed to be biased upward and the latter biased downward as a proxy for the true, but unobserved, reservation wage. In this dissertation, I estimate a reservation wage for each individual worker, using a stochastic-frontier framework and data from the National Longitudinal Survey of Youth. I use a heteroscedasticity-corrected reservation-wage equation to calculate reservation wages for unemployed workers, and estimate a simultaneous-equations model of the relationship between the reservation wage and the duration of unemployment. The empirical results reveal that the higher the reservation wage, the longer an individual must search theory. However, the length of time spent unemployed has no effect on the reservation wage. I calculate a quasi-rent or labor-market differential for each worker, defined as the difference between the individual's observed wage and reservation wage. Theory predicts that workers who earn a wage at or slightly above their minimum supply price are more likely to quit, whereas employees whose salaries exceed their opportunity costs face a greater likelihood of layoff. I specify a binomial logit model of the relationship between the probability of on-the-job search and the quasi-rent, and formulate a multinomial logit model of the relationship between the quasi-rent and the odds of a subsequent quit or layoff. I find a positive and statistically significant relationship between the quasi-rent and the probability that a person experiences a layoff, and a negative and marginally significant relationship between the quasi-rent and the probability of on-the-job search. The estimated effect of the quasi-rent on the probability of on-the-job search. The estimated effect of the quasi-rent on the probability of quitting is negative but not statistically different from zero. |
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Bibliography Citation
Voeks, Lisa Ann Ford. Reservation Wage, Job-Search Behavior, and Labor Turnover: A Stochastic-Frontier Approach. Ph.D. Dissertation, University of Georgia, 2000. |