Can workers’ increased pessimism about the labor market conditions raise unemployment?

Jaylson Jair da Silveira and Gilberto Lima

International Review of Economics & Finance, 2021, vol. 72, issue C, 125-134

Abstract: As there is extensive survey evidence on persistent heterogeneity in unemployment expectations across workers, it is a reasonable premise that the expected cost of job loss and the resulting provision of effort on the job are similarly heterogeneous across workers. Based on such a premise, the paper shows that the significant positive correlation between pessimistic unemployment expectations and actual unemployment which is consistently observed with household survey data can arise in a novel heterogeneous expectations-augmented efficiency wage modelling of the labor market through a composition effect.

Keywords: Labor market conditions; Unemployment expectations; Unemployment rate. (search for similar items in EconPapers)
JEL-codes: C60 D84 E24 E70 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Working Paper: Can Workers' Increased Pessimism about the Labor Market Conditions Raise Unemployment? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:72:y:2021:i:c:p:125-134

DOI: 10.1016/j.iref.2020.10.024

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