Measuring Reservation Wages: Comparing Methods to Estimate Valuations of Job Attributes

Abstract

Understanding jobseeker preferences---including their reservation wages and how much they value different non-wage amenities---is difficult because they are unobservable. We test four different methods for estimating these preference parameters using an experiment in a job-matching center. We find large and important differences between methods. We also estimate jobseekers' valuations of several job attributes, and explore how those valuations differ by characteristics like gender, education and length of unemployment. Among other findings, we show that in our sample of jobseekers in Egypt, women are more sensitive to long commutes, and value flexible schedules and on-site daycare more than men.