This paper investigates the reservation wages of unemployed persons on the basis of a job-search model with non-static reservation wages using panel data from Germany from 1987 to 1998. The results suggest that reservation wages are relatively high in Germany compared to other countries....

The method of instrumental variables was first used in the 1920s to estimate supply and demand elasticities, and later used to correct for measurement error in single-equation models. Recently, instrumental variables have been widely used to reduce bias from omitted variables in estimates of...

The author uses instrumental variable methods, and the decomposition of income into transitory and persistent components to distinguish underlying income inequality and changes in poverty from the effects attributable to measurement error or transitory shocks. He applies this methodology to...

The recent literature on instrumental variables (IV) features models in which agents sort into treatment status on the basis of gains from treatment as well as on baseline-pretreatment levels. Components of the gains known to the agents and acted on by them may not be known by the observing...

This paper examines the properties of instrumental variables (IV) applied to models with essential heterogeneity, that is, models where responses to interventions are heterogeneous and agents adopt treatments (participate in programs) with at least partial knowledge of their idiosyncratic...