Job search requirements for older workers: the effect on reservation wages

Abstract

PurposeThe goal of the paper is to investigate how reservation wages of older unemployed welfare recipients change once they are no longer subject to standard job search requirements.Design/methodology/approachThe authors apply a regression discontinuity design.FindingsConsistent with theoretical predictions, the authors’ findings indicate that eliminating job search requirements will tend to increase reservation wages.Practical implicationsThe results correspond to previous findings in the literature that monitoring leads to lower accepted wages and increased exits rates from unemployment, and that it may be a successful policy measure to keep older workers in the labor market.Originality/valueMonitoring of job search effort has been shown to be an effective method of activating unemployed people, but little evidence has been found on the effect of activation measures on older workers.