Expectations Set High : Understanding Reservation Wages in North Macedonia

The objectives of this study are to understand the determinants of reservation wages and measure the gap between reservation and market wages in North Macedonia. The study makes use of recently collected information on reservation wages in the Labo...

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Main Authors:	Petreski, Marjan, Oviedo, Ana Maria, Cancho, Cesar
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	RESERVATION WAGE MARKET WAGE WAGE EXPECTATION LABOR FORCE PARTICIPATION UNEMPLOYMENT SKILLED LABOR REMITTANCES
Online Access:	http://documents.worldbank.org/curated/en/324971569414813421/Expectations-Set-High-Understanding-Reservation-Wages-in-North-Macedonia http://hdl.handle.net/10986/32452

id	okr-10986-32452
recordtype	oai_dc
spelling	okr-10986-324522022-07-03T12:14:46Z Expectations Set High : Understanding Reservation Wages in North Macedonia Petreski, Marjan Oviedo, Ana Maria Cancho, Cesar RESERVATION WAGE MARKET WAGE WAGE EXPECTATION LABOR FORCE PARTICIPATION UNEMPLOYMENT SKILLED LABOR REMITTANCES The objectives of this study are to understand the determinants of reservation wages and measure the gap between reservation and market wages in North Macedonia. The study makes use of recently collected information on reservation wages in the Labor Force Survey 2016 and 2017. The analysis relies on ordinary least squares, propensity score matching, Heckman-corrected estimates, and panel fixed effects. The results suggest that it is mainly supply factors that shape reservation wages in the country. Higher education achievement sizably increases future wage expectations, while age and longer spells of unemployment reduce them. Demand factors are found to be insignificant for reservation wage formation. Observed by skill level, the results suggest that low-skilled individuals consistently value their skills higher than what the market offers and set too high expectations. These circumstances are aggravated in cases where the household is well-off and/or receives remittances. By contrast, highly skilled individuals, despite maintaining a positive reservation wage gap, have a propensity to accept market wages even when they fall below their reservation wage, likely because these workers fear rapid depreciation of their skills. 2019-09-26T15:37:14Z 2019-09-26T15:37:14Z 2019-09 Working Paper http://documents.worldbank.org/curated/en/324971569414813421/Expectations-Set-High-Understanding-Reservation-Wages-in-North-Macedonia http://hdl.handle.net/10986/32452 English Policy Research Working Paper;No. 9023 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia North Macedonia (Formerly the Former Yugoslav Republic of Macedonia)
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	RESERVATION WAGE MARKET WAGE WAGE EXPECTATION LABOR FORCE PARTICIPATION UNEMPLOYMENT SKILLED LABOR REMITTANCES
spellingShingle	RESERVATION WAGE MARKET WAGE WAGE EXPECTATION LABOR FORCE PARTICIPATION UNEMPLOYMENT SKILLED LABOR REMITTANCES Petreski, Marjan Oviedo, Ana Maria Cancho, Cesar Expectations Set High : Understanding Reservation Wages in North Macedonia
geographic_facet	Europe and Central Asia North Macedonia (Formerly the Former Yugoslav Republic of Macedonia)
relation	Policy Research Working Paper;No. 9023
description	The objectives of this study are to understand the determinants of reservation wages and measure the gap between reservation and market wages in North Macedonia. The study makes use of recently collected information on reservation wages in the Labor Force Survey 2016 and 2017. The analysis relies on ordinary least squares, propensity score matching, Heckman-corrected estimates, and panel fixed effects. The results suggest that it is mainly supply factors that shape reservation wages in the country. Higher education achievement sizably increases future wage expectations, while age and longer spells of unemployment reduce them. Demand factors are found to be insignificant for reservation wage formation. Observed by skill level, the results suggest that low-skilled individuals consistently value their skills higher than what the market offers and set too high expectations. These circumstances are aggravated in cases where the household is well-off and/or receives remittances. By contrast, highly skilled individuals, despite maintaining a positive reservation wage gap, have a propensity to accept market wages even when they fall below their reservation wage, likely because these workers fear rapid depreciation of their skills.
format	Working Paper
author	Petreski, Marjan Oviedo, Ana Maria Cancho, Cesar
author_facet	Petreski, Marjan Oviedo, Ana Maria Cancho, Cesar
author_sort	Petreski, Marjan
title	Expectations Set High : Understanding Reservation Wages in North Macedonia
title_short	Expectations Set High : Understanding Reservation Wages in North Macedonia
title_full	Expectations Set High : Understanding Reservation Wages in North Macedonia
title_fullStr	Expectations Set High : Understanding Reservation Wages in North Macedonia
title_full_unstemmed	Expectations Set High : Understanding Reservation Wages in North Macedonia
title_sort	expectations set high : understanding reservation wages in north macedonia
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/324971569414813421/Expectations-Set-High-Understanding-Reservation-Wages-in-North-Macedonia http://hdl.handle.net/10986/32452
_version_	1764476575632326656

Expectations Set High : Understanding Reservation Wages in North Macedonia

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