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- Title
WAGE INEQUALITY, RESERVATION WAGES AND LABOR MARKET PARTICIPATION: TESTING THE IMPLICATIONS OF A SEARCH- THEORETICAL MODEL WITH REGIONAL DATA.
- Authors
Möller, Joachim; Aldashev, Alisher
- Abstract
This article presents an analysis of the variation of gender-specific labor-market participation rates across regions. A search-theoretical model with intertemporal optimization behavior of agents suggests that a higher regional wage level fosters participation, whereas higher unemployment discourages workers. The authors extend the standard model by introducing two measures of dispersion, one for the spread below and one for the spread above the median. It is shown that wage dispersion in the lower tail of the distribution decreases the value of search and leads to lower participation rates, although the reverse is true for wage dispersion in the upper tail. These implications of the model are tested using spatial econometrics.
- Subjects
INCOME inequality; WAGES; LABOR market; UNEMPLOYMENT; EMPLOYEES; ECONOMETRICS
- Publication
International Regional Science Review, 2007, Vol 30, Issue 2, p120
- ISSN
0160-0176
- Publication type
Article
- DOI
10.1177/0160017606298431