Wages are only mildly cyclical, implying that shocks to labour demand have a larger short-run impact on unemployment … rather than wages, at odds with the quantitative predictions of the canonical search model – even if wages are only … reservation wages, and consider an alternative reservation wage model based on reference dependence in job search. This extension …

on whether it actually matters for wages, and if it does, what are the underlying mechanisms. We empirically examine … successfully find a job in a competitive market) to potential employers, resulting in lower wages; and 2) there exists a trade …-off between wages and search efficiency for quicker entry into local labor market. We also find some evidence that the informal …

, display significant sensitivity of wages to business cycle conditions and last longer …