The Gender Gap of Reservation Wage: New Evidence for Unemployed Workers?

The importance of difference in reservation wages for the gender wage gap based on two waves of survey data for a sample of newly unemployed individuals in Germany. These case are great for research on the ground. Especially for Indonesia. The perform of a decomposition analysis measures for reservation wage, detailed information on education, socio-demographics, labor market history, as well as personality traits. In this case, the findings indicate that the gender wage gap becomes small and statistically insignificant once we control for reservation wages. Moreover, the differences in reservation wages could arise from productivity differences, the fact that women anticipate discrimination and different unobserved traits or preferences.

For another cases in Indonesia, Indonesia is the fourth most populous country in the world.The population growth often has various problems, one of them is unemployment which is caused by an imbalance between the employment opportunities of the population and the availability of jobs along with the population. 

The problem of unemployment is indeed very complex to discuss and becomes an important issue, because it can be related to several factors, wages are one of the factors that affect the unemployment rate. For workers who set the minimum wageat a certain wage level, if all the wages offered are below that wage level, someone will refuse to get that wage and consequently cause unemployment. From an economic point of view, unemployment causes the people's prosperity to decrease.

Every year, universities produce graduates whose number continues to increase. Moreover, some economists estimate that unemployment in developing countries are generally dominated by youth unemployment and educated unemployed. In addition, university graduates who are expected to be able to fix this country from the various problems they faced, but instead participate trapped in a row of educated unemployment rates, because the higher a person's education level, the greater a person's desire to get a job that is in accordance with the education they are taking. 

This makes the educated workforce of university graduates prefer to be unemployed on the grounds that the work is not what it wants. University graduates are expected to be able to improve this nation in the future, but instead are trapped in the educated unemployment rate which always fluctuates every year because the more educated a person is, the higher the hope of getting the desired job. This phenomenon indicates that someone with higher education does not guarantee that they will get a job.

First of all, I think the gender wage gap and the role of reservation wage are very important, especially in education for unemployment. This is because the decomposition of gender and racial wage gaps can arguably be considered to be the Holy Grail in labor economics. Beside of that, in my opinion the reservation wage can be viewed as a measure of a person's eagerness or reluctance to accept employment and plays a key role in the job search. In this context, labor market histories appear to be an important driving factor of the gender wage gap, while socio demographic characteristics, education, personality traits, search behavior and expectations have only a small impact.

In addiction, as reservation wages reflect a worker's own valuation of their time while employed, high productivity workers are likely to set relatively higher reservation wages. On the other hand, lower productivity workers will tend to receive fewer wage offers and experience longer unemployment spells. As the finding implies that reservation wages play an important role for the gender gap in realized wages, then take a closer look at the determinants of reservation wages in an attempt to better understand how this initial gender gap in reservation wages arises.

In conclussion, I agree with the result of the research in the journals, the striking result implies that the inclusion of reservation wages halves the gender gap, making the remaining difference economically small and statistically insignificant for some factors. I believe that this case will lead them to lower their reservation wages over time in order to increase their employment prospects. Finally, the gender gap in reservation wages might exist because men and women have different personality traits or preferences which results in gender differences with respect to the value of non-market time and different job characteristics, like flexible time at work and on the continuity of work hours.