Reservation Wages and Unemployment

Last registered on February 21, 2025
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Pre-Trial

Trial Information

General Information

Title
Reservation Wages and Unemployment
RCT ID
AEARCTR-0015402
Initial registration date
February 19, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 21, 2025, 6:45 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Faisal Kattan
Affiliation
University of Chicago
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Other Primary Investigator(s)

PI Name
John List
PI Affiliation
University of Chicago
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PI Name
Andrew Simon
PI Affiliation
University of Virginia
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PI Name
Justin Holz
PI Affiliation
University of Michigan
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Additional Trial Information

Status
In development
Start date
2025-02-23
End date
2025-05-31
Keywords
Labor
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study examines how reservation wages relate to job search behavior and employment outcomes. We elicit reservation wages from low-income job seekers and randomly assign job offers based on labor market conditions, education level, and geographic location. The study tracks job application rates and employment status over time.
External Link(s)

Registration Citation

Citation
Holz, Justin et al. 2025. "Reservation Wages and Unemployment." AEA RCT Registry. February 21. https://doi.org/10.1257/rct.15402-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
This study examines how reservation wages influence job search behavior among low-income job seekers. Participants will state their minimum acceptable wage and provide job preferences. They will be randomly assigned job offers based on labor market conditions, education level, and geographic location.
Intervention Start Date
2025-02-23
Intervention End Date
2025-05-31

Primary Outcomes

Primary Outcomes (end points)
1. Job Application Rate – Whether individuals apply to at least one job after receiving a recommended job match.
2. Employment Status – Whether individuals are employed six months after participation.
3. Wages – Reported wages for individuals who gain employment.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
This study examines the relationship between reservation wages and job search behavior among low-income unemployed individuals. Participants will state their minimum acceptable wage and job preferences. They will be randomly assigned a job offer based on a randomly drawn wage reflecting labor market conditions. The study will track job application rates and employment status six months after participation.
Experimental Design Details
Not available
Randomization Method
Randomization into treatment is done in office by computer.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
2500 individuals
Sample size: planned number of observations
2500 individuals
Sample size (or number of clusters) by treatment arms
The study will enroll 2,500 low-income unemployed individuals registered in the government job-seeker database. Participants will be randomly assigned to one of two groups based on a randomly drawn wage:
- Group 1 (Y ≥ X, Job Offer Above Reservation Wage): We expect approximately 50% of participants to receive job offers that meet or exceed their reservation wage.
- Group 2 (Y < X, No Job Offer at Reservation Wage): We expect approximately 50% of participants to not receive a job offer matching their stated wage but to be presented with alternative opportunities.

This distribution ensures equal representation across treatment conditions to analyze the effects of reservation wages on job search behavior, job application rates, and employment outcomes over six months.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Chicago
IRB Approval Date
2024-07-25
IRB Approval Number
IRB24-1066
Analysis Plan