Working Paper: NBER ID: w1276
Authors: Harry J. Holzer
Abstract: This paper analyzes reservation wages and durations of nonemployment for young blacks and whites. Selfreported reservation wages are compared for blacks and whites before and after controlling for indicators of labor demand such as received wages, weeks worked, or other personal characterlstics. The effects of these reservation wages on durations of nonemployment as well as on subsequent wages are analyzed as well.The results show that young blacks seek jobs and wages which are comparable to those of young whites, but which are higher relative to what young blacks obtain. On the other hand, young blacks appear at least if not more likely to take specific low-skill jobs, albeit teporariiy. These reservation wages appear to have positive effects on nonemployment durations and subsequent wages for both groups, and explain up to a third of the higher nonemployment durations of young blacks.
Keywords: youth employment; reservation wages; nonemployment; labor market; racial disparities
JEL Codes: J64; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| discrimination and skills (J70) | probabilities of receiving job offers (J68) |
| reservation wages (R21) | nonemployment durations (J64) |
| nonemployment durations (J64) | subsequent wages (J31) |
| reservation wages (R21) | subsequent wages (J31) |
| higher reservation wages (J39) | longer nonemployment spells (J65) |