The Impact of Age on the Reservation Wage: The Role of Employment Efficacy and Work Intention

Abstract

This study explores the relationship between age and reservation wage. The authors investigate whether individuals’ attitudes toward employment, that is, their “employment efficacy” and “work intention,” mediate this relationship. The authors examine this in the Belgian labor market, where substantial differences exist between blue-collar workers, white-collar workers, and civil servants regarding payment systems, employment protection, and pension benefits. Path analysis on a sample of 22,796 Belgian workers aged 18 to 60 years reveals a reverse U-shaped relationship between age and the reservation wage via employment efficacy and a U-shaped relationship via work intention. In addition, study analyses also show a direct relationship between age and the reservation wage. The effects vary with employment status. The authors discuss implications for theory, practice, and future research.