Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289849 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. 2314
Publisher: 
Johannes Kepler University of Linz, Department of Economics, Linz
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: 
beliefs formation
wage expectations
outside options
consumption
JEL: 
C33
D84
E24
J31
J63
Document Type: 
Working Paper

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