TY  - BOOK
AU  - Holzer,Harry J.
ED  - National Bureau of Economic Research.
TI  - On the Rationality of Black Youth Unemployment
T2  - NBER working paper series
PY  - 1984///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - August 1984; Hardcopy version available to institutional subscribers
N2  - In this paper I provide some evidence on the question of whether the behavior of unemployed young blacks, whose reservation wages are relatively high and whose jobless spells are very lengthy, reflect rational maximizing choices. To do this, I use a simple income-maximizing job search model to imply employment probabilities and various elasticities which are compared to those which are actually observed for young blacks.The results show that, for reasonable discount rates, the employment probabilities implied by income-maximization are consistent with those observed for young blacks. The elasticities of reservation wages with respect to nonwage income that are implied by income-maximizing are also consistent with those estimated econometrically for this group. This was true despite the many assumptions embodied in this model whose validity fora sample of low-income youth is highly questionable.The evidence thus suggests that young blacks are making economically rational choices by choosing high reservation wages and lengthy spells without jobs
UR  - https://www.nber.org/papers/w1411
UR  - http://dx.doi.org/10.3386/w1411
ER  -