Reservation Wage for High Skilled Graduates in Bangladesh: Preliminary Factors

This paper preliminarily discusses about the determinants of reservation wage for graduates in Bangladesh. The researchers discussed several models in order to identify the common factors which determine the reservation wage of the tertiary graduates in Bangladesh. All these models are multiple linear regression models. Data was collected on both employed and unemployed individuals across the country who graduated from different private and public universities. Initially the researchers investigated the following factors: socio-economic status (Parental income), selection of occupation, duration of unemployment, difference between actual and reservation wage, managerial level of job, sources of different media of job applications (both formal and informal) and in the revised phase of the model the researchers discovered that that inclusion of ‘previous working experience’ made a significant difference in the relationship among dependent and independent variables. One noticeable difference in the findings of the current researchers compared to those who worked on the same topic earlier was: positive relationship between duration of unemployment and reservation price of the graduates. The researchers further explored reasons of this above result theoretically. Finally, the researchers accepted the following variables (rejected as null hypothesis) as significant factors (Socio-economic background, difference between actual salary and reservation price, managerial level of job, media of job applications in terms of formal or informal, previous working experience) to influence the graduate reservation wage in Bangladesh (in the alternatives). Additionally, the researchers also explained why’ duration of unemployment’ was not selected as a crucial determinant in the current paper. Finally the researchers prescribed some positive solutions on how firms in Bangladesh could deal with the increasing demand of wage premiums from high skilled graduates and what the possible consequences are if they failed to do so.