Great Expectations: Past Wages and Unemployment Durations

Arbeitspapier

Decomposing wages into worker and firm wage components, we find that firm-fixed components (firm rents) are sizeable parts of workers' wages. If workers can only imperfectly observe the extent of firm rents in their wages, they might be mislead about the overall wage distribution. Such misperceptions may lead to unjustified high reservation wages, resulting in overly long unemployment durations. We examine the infuence of previous wages on unemployment durations for workers after exogenous lay-offs and, using Austrian administrative data, we find that younger workers are, in fact, unemployed longer if they profited from high firm rents in the past. We interpret our findings as evidence for overconfidence generated by imperfectly observed productivity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1009

Classification and Topics

• Classification: Wirtschaft
• Subject: Unemployment ; Job Search ; Overconfidence ; Lohnstruktur ; Lohnbildung ; Anspruchslohn ; Arbeitslosigkeit ; Dauer ; Österreich

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Böheim, René ; Horvath, Gerard Thomas ; Winter-Ebmer, Rudolf
• Event: Veröffentlichung
• (who): Johannes Kepler University of Linz, Department of Economics
• (where): Linz
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/73620
• Last update: 10.03.2025, 11:42 AM CET