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Effects of unemployment news on economic perceptions – Evidence from German Federal States

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  • Garz, Marcel

Abstract

This study investigates whether news coverage about unemployment affects people's perceptions of the state of the economy. I compile a German state-level data set, based on household surveys and information obtained from analyzing 35 newspapers. The data are used to separate media effects from real economic consequences, taking advantage of two sources of exogenous variation. First, I exploit the salience of “milestones” in the number of unemployed. The news value of these milestones, which is not based on economic fundamentals, causes the media to report more about unemployment than usually. Second, I show that the amount of reports decreases when competing newsworthy events occur at the time of the release of the monthly unemployment statistics. Instrumental variable estimates indicate that a one standard deviation increase in coverage accounts for about a quarter of the average monthly change in the index of economic perceptions.

Suggested Citation

  • Garz, Marcel, 2018. "Effects of unemployment news on economic perceptions – Evidence from German Federal States," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 172-190.
  • Handle: RePEc:eee:regeco:v:68:y:2018:i:c:p:172-190
    DOI: 10.1016/j.regsciurbeco.2017.11.006
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    References listed on IDEAS

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    Cited by:

    1. Marcel Garz & Verena Pagels, 2017. "Cautionary Tales: Celebrities, the News Media, and Participation in Tax Amnesties," CESifo Working Paper Series 6795, CESifo Group Munich.
    2. Avdiu, Besart & Gruhle, Tobias, 2018. "Contagion and information frictions in emerging markets: the role of joint signals," MPRA Paper 84872, University Library of Munich, Germany.

    More about this item

    Keywords

    Left-digit bias; media; News competition; Regional differences; Sentiment;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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