Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229362
Authors: 
Jones, Sam
Santos, Ricardo
Year of Publication: 
2020
Series/Report no.: 
WIDER Working Paper No. 2020/138
Abstract: 
How jobseekers set their earnings expectations is central to job search models. To study this process, we track the evolution of own-earnings forecasts over 18 months for a representative panel of university-leavers in Mozambique and estimate the impact of a wage information intervention. We sent participants differentiated messages about the average earnings of their peers, obtained from prior survey rounds. Demonstrating the stickiness of (initially optimistic) beliefs, we find an elasticity of own-wage expectations to this news of around 7 per cent in the short term and 16 per cent over the long term, which compares to a 22 per cent elasticity in response to unanticipated actual wage offers. We further find evidence of heterogeneous updating heuristics, where factors such as the initial level of optimism, cognitive skills, perceived reliability of the information, and valence of the news shape how wage expectations are updated. We recommend institutionalizing public information about earnings.
Subjects: 
earnings expectations
information intervention
updating heuristics
Mozambique
JEL: 
D83
D84
E24
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-895-5
Document Type: 
Working Paper

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