Outside options and wages: What can we learn from subjective assessments?
This paper studies the correlates of subjective assessments of how easy it would be for a worker to find another job as good as the present one and how easy it would be for an employer to replace a worker. First, I study the correlates of these two subjective assessments. Second, I study whether respondents who report better chances of reemployment receive higher wages and whether respondents who think they are easy to replace receive lower wages. The results are consistent with the standard job-matching model, which predicts that wages increase with better outside opportunity of the worker and fall with better outside opportunity of the employer.
KeywordsWages Outside options Job-matching model
JEL ClassificationJ31 J41 J50 M51
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