The impact of age on the reservation wage. The role of employability

This study investigates how individual wage claims evolve with age. We focus on two employability factors, ‘willingness to move’ and ‘ease of movement’, to gain insight in the underlying process of how age affects the reservation wage. Path analysis on a sample of 8113 Belgian workers aged 40 to 60 years reveals a net positive effect of age on the reservation wage. This relationship, however, is very complex. While age positively affects the reservation wage through willingness to move, it has a negative influence through ease of movement. The negative indirect effect dominates the positive indirect effect. However, our analyses also reveal a direct, positive effect of age on the reservation wage. Although the focus on employability yields promising results, future research should further unravel the relationship between age and the reservation wage.