Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229271
Authors: 
Jones, Sam
Santos, Ricardo
Xirinda, Gimelgo
Year of Publication: 
2020
Series/Report no.: 
WIDER Working Paper No. 2020/47
Abstract: 
Inaccurate expectations of future wages are found in many contexts. Yet, existing studies overwhelmingly refer to high-income countries, and there is little evidence regarding the sources of expectational errors. Based on a longitudinal survey of graduates from the six largest universities in Mozambique, we find the gap between expected and realized first earnings are extremely large. Applying a novel decomposition procedure, we find these errors are not driven by incorrect information about labour market returns. Job mismatches of various kinds account for over one-third of the total expectational error, while the remaining error reflects bias from misleading reference points (superstar salaries). While this suggests a need for greater transparency regarding levels of remuneration, we find no evidence that optimistic expectations are associated with poorer labour market outcomes.
Subjects: 
job mismatch
Mozambique
optimism
tracer study
wage expectations
JEL: 
J20
J31
D91
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-804-7
Document Type: 
Working Paper

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