This paper provides new empirical evidence on the relationship
between reservation wages of unemployed workers and macroeconomic
factors--including the unemployment rate and generosity of the
unemployment compensation system--as well as individual-specific
determinants, such as human capital proxies and length of
unemployment spell. The longitudinal dataset provides an
interesting perspective on how reservation wages change over time
and how they correlate with accepted wage offers for workers who
move from unemployment to employment. The findings shed light on
the disincentive effects of the German tax and transfer system for
the employment decisions of unemployed workers at different skill
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