The Accuracy of Job Seekers' Wage Expectations
General Economics
2024-09-11 v2 Economics
Abstract
We study the accuracy of job seekers' wage expectations by comparing subjective beliefs to objective benchmarks using linked administrative and survey data. Our findings show that especially job seekers with low objective earnings potential and those predicted to face a penalty compared to their pre-unemployment wage display overly optimistic wage expectations. Moreover, wage optimism is amplified by increased job search incentives and job seekers with overoptimistic wage expectations tend to overestimate their reemployment chances. We discuss the labor market implications of wage optimism, as well as the role of information frictions and motivated beliefs as sources of overoptimism.
Keywords
Cite
@article{arxiv.2309.14044,
title = {The Accuracy of Job Seekers' Wage Expectations},
author = {Marco Caliendo and Robert Mahlstedt and Aiko Schmeißer and Sophie Wagner},
journal= {arXiv preprint arXiv:2309.14044},
year = {2024}
}