This paper provides evidence on the behavior of reservation wages over the spell of unemployment using high … to 24 weeks, we find that self‐reported reservation wages decline at a modest rate over the spell of unemployment, with … point estimates ranging from 0.05 to 0.14 percent per week of unemployment. The decline in reservation wages is driven …

be Pareto-distributed. In the limiting case where the unemployment rate goes to zero, the aggregate production function … market conditions such as unemployment and workers' reservation wage. I simulate the model and examine its predictions for …