Which worker will have a larger reservation wage

Reference no: EM132180354

Question: Compare two unemployed workers; the first worker is 25 years old and the second worker is 55 years old. Both workers have similar skills and face the same wage offer distribution. Suppose also that both workers incur similar search costs. Which worker will have a larger reservation wage? Why? Does search theory help you understand why the unemployment rate of young workers differs from the unemployment rate of older workers?

Reference no: EM132180354

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