Can Workers' Increased Pessimism about the Labor Market Conditions Raise Unemployment?

Jaylson Silveira () and Gilberto Lima

No 2019_38, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: As there is evidence on persistent heterogeneity in unemployment expectations across workers, it is a reasonable premise that the expected cost of job loss and the provision of effort on the job are also heterogeneous across workers. Based on such premise, we show that the positive correlation between pessimistic unemployment expectations and actual unemployment which is observed with survey data can arise in a heterogeneous expectations-augmented efficiency wage model through a composition effect which is empirically testable.

Keywords: Labor market conditions; unemployment expectations; unemployment rate (search for similar items in EconPapers)
JEL-codes: E1 J3 J6 (search for similar items in EconPapers)
Date: 2019-09-23
New Economics Papers: this item is included in nep-mac
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Journal Article: Can workers’ increased pessimism about the labor market conditions raise unemployment? (2021)
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