Reservation wage analysis of unemployed youths in Australia

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20 Citations (Scopus)


This paper focuses on the analysis and structural estimation of the reservation wage function from a job search model using modified 2SLS and maximum-likelihood procedures with selectivity bias adjustments. The existing structural approaches to estimation are also reviewed. Empirical estimates of the determinants of the reservation wages of unemployed youths in Australia are obtained using data from the Australian National Longitudinal Survey. The results support most of the predictions of the job search model and indicate the presence of positive duration dependence in unemployment. These findings differ from the popularly held view of declining probability of escape from unemployment as its duration increases. There is also evidence which suggests that quantity constraints are important in determining unemployment in Australia.

Original languageEnglish
Pages (from-to)1341-1350
Number of pages10
JournalApplied Economics
Issue number8
Publication statusPublished - Aug 1 1991

ASJC Scopus subject areas

  • Economics and Econometrics


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