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Home | Events Archive | Worker Beliefs about Outside Options

Worker Beliefs about Outside Options

  • Series
    Micro Seminars
  • Speaker(s)
    Nina Roussille (London School of Economics, United Kingdom)
  • Location
  • Date and time

    March 11, 2022
    16:00 - 18:00

Abstract: Workers wrongly anchor their beliefs about outside options on their current wage. In particular, low-paid workers underestimate wages elsewhere. We document this anchoring bias by eliciting workers’ beliefs in a representative survey in Germany and comparing them to measures of actual outside options in linked administrative labor market data. In an equilibrium model, such anchoring can give rise to monopsony and labor market segmentation. In line with the model, misperceptions are particularly pronounced among workers in low-wage firms. If workers had correct beliefs, at least 10% of jobs, concentrated in low-wage firms, would not be viable at current wages

If you wish to attend the seminar or would like to have a bilateral with the speaker, please contact the seminar organizers Anne Boring (boring@ese.eur.nl) or Robert Dur (dur@ese.eur.nl). More information will follow soon.