The main goal of this paper is to estimate the reservation wage either for employed, unemployed or economically inactive individuals in Brazil. For this purpose, we use data from the National Household Sample Survey (PNAD) from 2006 and estimate a model of joint determination of labor supply, employment and wages, taking into account a correction of sample selection bias involved in both the workforce participation decision and the job search process. In turn, the reservation wages were estimated by discounting the value of utility for the workforce participation decision from the linear predictions of conditional wages. The finding suggests a positive relationship between reservation wages, education level and aged of workers from different positions on the labor market.
Reservation Wage; Self-selection; Labor Supply; Brazil
