Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282651 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16524
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Little is known about how workers update expectations about job search and earnings when exposed to labor market news. To identify the impact of news on expectations, I exploit Foxconn's unexpected announcement to build a manufacturing plant in Racine County. Exposure to positive news leads to an increase in expected salary growth at the current firm. Individuals also revise their expectations about outside offers upward, anchoring their beliefs to Foxconn's announced wages. They act on their updated beliefs with a small increase in current consumption. Negative news from a scaled-down plan leads to a revision of expectations back toward baseline.
Subjects: 
outside options
wage expectations
beliefs formation
consumption
JEL: 
C33
D84
E24
J31
J63
Document Type: 
Working Paper

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