What does the term 'reservation wage' refer to?

Labour Market MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

PPSCFPSCNTSPakistan govt jobs
Subject
Labour Marketeconomics-mcqs › labour-market
Published
1 Jun 2019
Last updated
28 May 2026

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Explanation

The reservation wage is defined as the minimum amount of pay that a worker is willing to accept to take a job. It represents the lowest compensation that makes employment worthwhile for the individual.

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