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Can information correct optimistic wage expectations? Evidence from Mozambican job-seekers

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  • Jones, Sam
  • Santos, Ricardo

Abstract

Forward-looking expectations are central to job search but often inaccurate. To test whether public information can help correct beliefs, we embed an experiment in a longitudinal survey of Mozambican graduates. We quantify responses of own-earning expectations to information about peers’ current earnings, sent by SMS. Optimistic beliefs were revised downward by a larger margin in the treatment group. But, consistent with a theoretical on-the-job search model, responses to news do not conform to a linear updating framework, with strong evidence for limited responses to negative news. This explains the moderate impact of our intervention and why optimistic expectations remained persistent.

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  • Jones, Sam & Santos, Ricardo, 2022. "Can information correct optimistic wage expectations? Evidence from Mozambican job-seekers," Journal of Development Economics, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:deveco:v:159:y:2022:i:c:s0304387822001298
    DOI: 10.1016/j.jdeveco.2022.102987
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