Labor Market News and Expectations about Jobs & Earnings

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16524

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Expectations; Speculations ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Wage Level and Structure; Wage Differentials ; Labor Turnover; Vacancies; Layoffs
• Subject: outside options ; wage expectations ; beliefs formation ; consumption

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmidpeter, Bernhard
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282651
• Last update: 10.03.2025, 11:43 AM CET