What is the reservation wage?
Reservation wage is the lowest wage that someone accepts for work. Determination of exclusive wages depends on the individual and the work and can make up an important part of the job search. Many people sit down to determine the lowest wage they can take when they start looking for a job so that they can use it in evaluation of job opportunities and job offers.
A huge number of factors can affect wages. One may include the nature of the work. People are often willing to accept less to work in work they like, because the benefits of work are considered an acceptable compromise for lower wages. On the other hand, people may want more for undesirable work. Impatibility can be determined by the danger, the nature of work, the potential for boredom and other factors. For example, someone could take a low wage for a bookstore official to have access to things like a discount on books for books, but would not take into account the same wage for a work in a retail store that sells the leaves becauseThe work is less desirable or comes with less benefits.
For people who are unemployed and are looking for a job, the reservation wage may differ. As long as people receive unemployment benefits, there is no motivation to accept work that provides less compensation than benefits. However, as soon as these benefits occur, if someone does not have many savings, the pressure to find any work may be such that a job seeker accepts a lower wage instead of having no work.
People can also consider compromises such as lifestyle changes that must accompany work. For example, a parent who wants to stay at home with children could have a higher reservation wage, as the benefits of staying at home can be considered high, especially if the other parent can provide enough work to support the household. In this case, someone could only accept part of the part, which is both interesting and high paying.
the related term isReservation price. The reservation price is the highest price that the consumer is willing to pay for good or service. Like the reservation wage, reservation prices may vary depending on a number of situational factors. People are usually willing to pay more for rare items, for example or for items perceived as high quality.