Reservation wages and the earnings capacity of lone and couple mothers: Are wage expectations too high?

Gray, Matthew and Renda, Jenny (2006): Reservation wages and the earnings capacity of lone and couple mothers: Are wage expectations too high? Published in: Australian Institute of Family Studies Research Paper No. 37

Abstract

This paper presents evidence on the extent to which non-employed mothers who would like to work are able to provide an estimate of their reservation income. There is virtually no existing Australian research on the extent to which jobseekers are able to estimate their reservation income. The paper also tests the hypothesis that unrealistic wage expectations are an important factor in explaining relatively low employment rates among mothers by comparing reservation hourly wages with the estimated earning capacity of mothers. If reservation wages are greater than what we estimate the mother would earn in the labour market, then this is likely to make it difficult to find employment.

• Item Type: MPRA Paper
• Institution: Australian Institute of Family Studies
• Language: English
• Keywords: Employment; reservation wages; working hours
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs; J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply

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