Labor Market News and Expectations about Jobs & Earnings

Bernhard Schmidpeter ()
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Bernhard Schmidpeter: Vienna University of Economics and Business

No 16524, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Little is known about how workers update expectations about job search and earnings when exposed to labor market news. To identify the impact of news on expectations, I exploit Foxconn’s unexpected announcement to build a manufacturing plant in Racine County. Exposure to positive news leads to an increase in expected salary growth at the current firm. Individuals also revise their expectations about outside offers upward, anchoring their beliefs to Foxconn's announced wages. They act on their updated beliefs with a small increase in current consumption. Negative news from a scaled-down plan leads to a revision of expectations back toward baseline.

Keywords: outside options; wage expectations; beliefs formation; consumption (search for similar items in EconPapers)
JEL-codes: C33 D84 E24 J31 J63 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2023-10
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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