Reservation wage, the lowest wage at which an individual is willing to work, plays an important role in economic models of job search, labor supply and labor market participation (e.g., Blackaby, Latreille, Murphy, O'Leary, & Sloane, 2007). Shimmer and Werning (2007) argued that a risk-averse worker's after-tax reservation wage encodes all the relevant information about her welfare. Moreover, reservation wages also help us assess beliefs of workers regarding their expected earnings in the labor market. Empirical evidence shows that reservation wages have predictive power for realized wages, unemployment durations and the types of offers that workers accept (Krueger & Mueller, 2016). However, there is a dearth of studies analyzing the gender differences in reservation wages. Caliendo, Lee, and Mahlstedt (2017) find that women report 12.5% lower reservation wages than men and that gender reservation wages primarily drive gender wage gaps in Germany. They also argue that nearly half of the gender reservation wage gap in Germany is unexplained even after accounting for labor market as well as personality characteristics. Brown, Roberts, and Taylor (2011) suggest that women in Britain, on average, report 9% lower reservation wages than men. For individuals without children, almost none of the gender reservation wage gap is explained and for individuals with children, half of the gender reservation wage gap is unexplained in Britain after controlling for individual characteristics.

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This paper provides direct evidence of attempted tax evasion in response to changes in tariff rates in a small open economy using transaction‐level customs data for Pakistani importers. Our results show that there exists a systematic relationship between the difference in declared and assessed import values of the shipment, and the duty rate charged to the importer. We demonstrate that higher duty rates are associated with a greater misdeclaration of imports. In particular, a one‐percentage point increase in duty rates, on average, is linked with 0.4% increase in under‐invoicing of imports by Pakistani firms. The study explores several dimensions to examine the variation in estimates obtained across product types, import origins, modes of processing import transactions and the role of firm characteristics, such as, frequency of imports, in determining the extent of misdeclaration.