The Asking Wage-Duration of Unemployment Relation Revisited

SIMULTANEOUS EQUATION ESTIMATES OF JOB SEARCH DURATION RELATIONSHIPS PROVIDE A MORE ACCURATE REPRESENTATION OF THE REEMPLOYMENT PROCESS THAN DO SINGLE EQUATION ANALYSES. GIVEN A CONSTANT WAGE OFFER DISTRIBUTION AND A DECLINING ASKING WAGE OVER TIME, THE PROBABILITY OF RECEIVING AN OFFER AT LEAST EQUAL TO THE ASKING WAGE INCREASES WITH UNEMPLOYMENT DURATION. PREVIOUS ANALYSES HAVE IMPLICITLY ASSUMED DURATION OF UNEMPLOYMENT TO BE INDEPENDENT OF THE LEVEL OF THE ASKING WAGE BY USING SINGLE EQUATION ESTIMATION TECHNIQUES SUCH AS ORDINARY LEAST SQUARES (OLS) TO ESTIMATE THE ASKING WAGE DURATION RELATION. SIMULTANEOUS EQUATION ESTIMATES IMPLY AN AVERAGE MONTHLY DECLINE IN ASKING WAGES OF 5.55 PERCENT FOR UNEMPLOYED INDIVIDUALS RECEIVING LESS THAN THE MAXIMUM WEEKLY BENEFIT AMOUNT AND 3.03 PERCENT FOR THOSE RECEIVING THE MAXIMUM. THESE ESTIMATES ARE CONSIDERABLY LARGER THAN THOSE OBTAINED UTILIZING OLS TECHNIQUES. EQUATIONS. REFERENCES.