Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258901 
Year of Publication: 
2019
Series/Report no.: 
CEBI Working Paper Series No. 01/19
Publisher: 
University of Copenhagen, Department of Economics, Center for Economic Behavior and Inequality (CEBI), Copenhagen
Abstract: 
Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2-3 percent of disposable income.
Subjects: 
Optimization frictions
labor supply
bunching
inattention
student labor markets
JEL: 
H21
H24
J22
Document Type: 
Working Paper

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