Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282103 
Year of Publication: 
2023
Series/Report no.: 
Discussion Paper No. 411
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
Wage growth occurs almost exclusively in full-time work, whereas it is close to zero in part-time work. German women, when asked to predict their own potential wage outcomes, show severely biased expectations with strong over-optimism about the returns to part-time experience. We estimate a structural life-cycle model to quantify how beliefs influence labor supply, earnings and welfare over the life cycle. The bias increases part-time employment strongly, induces flatter long-run wage profiles, and substantially influences the employment effects of a widely discussed policy reform, the introduction of joint taxation. The most significant impact of the bias appears for college-educated women.
Subjects: 
returns to experience
biased beliefs
part-time work
dynamic life-cycle models
JEL: 
D63
H23
I24
I38
J22
J31
Document Type: 
Working Paper

Files in This Item:
File
Size
1.59 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.