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Matching Frictions and Distorted Beliefs: Evidence from a Job Fair Experiment

Author

Listed:
  • Girum Abebe
  • A Stefano Caria
  • Marcel Fafchamps
  • Paolo Falco
  • Simon Franklin
  • Simon Quinn
  • Forhad Shilpi

Abstract

We evaluate the impacts of a randomised job fair intervention in which jobseekers and employers can meet at low cost. The intervention generates few hires, but it lowers participants’ expectations and causes both firms and workers to invest more in search as predicted by a theoretical model; this improves employment outcomes for less educated jobseekers. Through a unique two-sided belief-elicitation survey, we confirm that firms and jobseekers have overoptimistic expectations about the market. This suggests that, beyond slowing down matching, search frictions have a second understudied cost: they entrench inaccurate beliefs, further distorting search strategies and labour-market outcomes.

Suggested Citation

  • Girum Abebe & A Stefano Caria & Marcel Fafchamps & Paolo Falco & Simon Franklin & Simon Quinn & Forhad Shilpi, 2025. "Matching Frictions and Distorted Beliefs: Evidence from a Job Fair Experiment," The Economic Journal, Royal Economic Society, vol. 135(671), pages 2089-2121.
    • Handle: RePEc:oup:econjl:v:135:y:2025:i:671:p:2089-2121.
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    File URL: http://hdl.handle.net/10.1093/ej/ueaf026
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    Cited by:

    1. is not listed on IDEAS
    2. Banerjee, Abhijit V. & Chiplunkar, Gaurav, 2024. "How important are matching frictions in the labor market? Experimental & non-experimental evidence from a large Indian firm," Journal of Development Economics, Elsevier, vol. 171(C).
    3. Marco Caliendo & Robert Mahlstedt & Aiko Schmei{ss}er & Sophie Wagner, 2023. "The Accuracy of Job Seekers' Wage Expectations," Papers 2309.14044, arXiv.org, revised Sep 2024.

    More about this item

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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