A note on the gender reservation wage gap in developing countries
| DOI | http://doi.org/10.1111/sjpe.12255 |
| Author | Bilal Muhammad Khan,Muhammad Farhan Majid |
| Date | 01 November 2020 |
| Published date | 01 November 2020 |
462
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wileyonlinelibrary.com/journal/sjpe Scott J Polit Econ. 2020 ;67:462–468.
© 2020 Scottis h Economic Societ y
1 | INTRODUCTION AND BACKGROUND
Reservatio n wage, the lowest wage at which an in dividual is willing to work, pl ays an important role in eco nomic
models of job sear ch, labor supp ly and labor mar ket participa tion (e.g., Black aby, Latreille, Mur phy, O'Leary, &
Sloane, 2007 ). Shimmer and Wern ing (2007) arg ued that a risk-averse wor ker's after-tax reser vation wage en -
codes all the rel evant information about her welf are. Moreover, reservation wag es also help us assess beliefs of
workers regarding their expected earnings in the labor market. Empirical evidence shows that reservation wages
have predictive p ower for realized wages, unempl oyment durations and the typ es of offers that workers accept
(Krueger & Muel ler, 2016). However, there is a dear th of studies analyzing th e gender differences in rese rvation
wages.
Caliendo, Le e, and Mahlsted t (2017) find that wome n report 12. 5% lower reser vation wages tha n men and
that gender rese rvation wages primaril y drive gender wage gaps in Germa ny. They also argue t hat nearly half of
the gender rese rvation wage gap in Ge rmany is unexplained even a fter accounting for lab or market as well as per-
sonality cha racteristics. Brow n, Roberts, and Taylor (2011) sugges t that women in Britain, on aver age, report 9%
lower reserv ation wages than men. For ind ividuals without child ren, almost none of the gend er reservation wage
gap is explaine d and for individuals wi th children, half of the ge nder reservatio n wage gap is unexplaine d in Britain
after controlling for individual characteristics.
Accepted: 7 May 202 0
DOI: 10 .1111/sjpe.1 2255
INVITED REVIEW
A note on the gender reservation wage gap in
developing countries
Bilal Muhammad Khan1 | Muhammad Farhan Majid2
1Research Ins titute for Global Val ue Chains,
Universit y of International Bu siness and
Economics, Beijing, P.R. China
2Departm ent of Economics, Uni versity of
Georgia, At hens, GA, USA
Correspondence
Bilal Muhamm ad Khan, Room 421, Ke Yan
Building, RI GVC, UIBE, 10 Huixi n East
Street, Beijing 100029, China.
Email: bkhan@usc.edu
Funding information
"Fundament al Research Funds for t he
Central Universities" in UIBE, Grant/Award
Number: 18QD22; 111 Project, Grant/
Award Number : B18014; National Natura l
Science Found ation of China, Gra nt/Award
Number: G0304-71733002
Abstract
This is the first pa per to document the ex istence of a gen-
der reservati on wage gap in developing cou ntries. We find
a 22.6% gender reser vation wage gap, a gap t hat is much
larger than current e stimates for develop ed countries.
Assets play the la rgest role in closing this gap, wher eas adult
height widens the gap a mong the poor.
KEYWORDS
developing countries, gender, reservation wages
JEL CLASSIFI CATION
J13; J24; J64
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