Learning to update your reservation wage while looking for a new job

Ben Kriechel, Maastricht University
Gerard Antonius Pfann, Maastricht University

Abstract

We combine post-displacement survey data with information from personnel files of a displacing firm in order to reveal sources of worker heterogeneity in search time and wage losses. The Fokker Personnel Files and Survey are described in detail. We develop a dynamic reservation wage with updating. The method of updating is based on the simple idea that job seekers are informed about successful matches of their former colleagues similar to them. The data offer empirical support for the updating model.