Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154735
Authors: 
Cardoso, Ana Rute
Loviglio, Annalisa
Piemontese, Lavinia
Year of Publication: 
2016
Citation: 
[Journal:] IZA Journal of Labor Policy [ISSN:] 2193-9004 [Volume:] 5 [Year:] 2016 [Issue:] 13 [Pages:] 1-22
Abstract: 
We analyze the impact of misperceptions of the unemployment rate on individual wages, using the European Social Survey. We follow a threefold strategy to tackle potential endogeneity problems, as the model includes the following: controls for worker's ability, the regional unemployment rate, and country fixed effects. We estimate interval regression models. When subjective perceptions overstate the country unemployment rate, a one percentage point gap between the perceived and the actual rates reduces wages by 0.4 to 0.7 %. We discuss a potential mechanism. A pessimistic view of the labor market leads to concern over own employment prospects, lowering perceived bargaining power and reservation wages.
Subjects: 
Wage dispersion
Labor market tightness
Perceptions
JEL: 
J31
D80
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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