Updating about Yourself by Learning about the Market: The Dynamics of Beliefs and Expectations in Job Search / Qiwei He, Philipp Kircher.

Format:

Book

Author/Creator:

He, Qiwei.

Contributor:

National Bureau of Economic Research.

Kircher, Philipp.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31940.

NBER working paper series no. w31940

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This study documents how job seekers update perceived job-finding prospects by unemployment duration and by learning about aggregate unemployment. We find that job seekers perceive an 18% decline in their job-finding probability for each additional month of unemployment, but perceive a higher job-finding probability when the aggregate unemployment rate is unexpectedly low. We develop a job search model with learning and updating to quantify the impact of perceived aggregate unemployment on subjective job-finding probabilities, revealing an overreaction to news about aggregate conditions. These beliefs can potentially offset a non-trivial part of the negative consequences of moral hazard in job search.

Notes:

Print version record

December 2023.