A life-course perspective on labor supply: Temporal, institutional, and social embeddedness as determinants of individual reservation wages

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Since the Hartz-legislation, the German labour market is characterised by an increasing employment rate, a shortage of skilled manpower, and a growing low-pay sector. Amplified by demographic change, labour supply and especially the reservation wage become central for understanding such labour markets. While economic research has been investigating the determinants of reservation wages and labour supply for quite some time, a sociological investigation of this topic is still missing – despite substantial theoretical and empirical research gaps. The outlined research project aims to close these gaps and to develop a genuinely sociological perspective on labour supply based on the life-course approach. In particular, the effects of temporal, institutional, and social embeddedness on individual reservation wages are the core of the project. We develop theoretical models of these three forms of embeddedness and test their predictions based on longitudinal data of the Panel Study “Labour Market and Social Security” (PASS), utilizing advanced methods of causal analysis. The projects puts special emphasis on social groups, which – due to precarious life situations and the institutional setting – may be forced to lower their reservation salary and enter into lower-paid employment relationships. By that, we not only close important research gaps in our understanding of labour markets, but also contribute to the research fields of social inequality and poverty.