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The formation of experts' expectations on labour markets : do they run with the pack?

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  • Schanne, Norbert

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"Expectations regarding the economic development might be correlated due to various reasons: because individuals use the same public information and similar evaluation methods, and because of social learning or herding amongst peers. We analyse to what extent expectations are driven by herd behaviour, and if it contributes to make expectations more realistic. In a novel survey the CEOs of the local departments of the German Federal Employment Agency report their expectations on unemployment in the short run. In this data we can discriminate between close and less-close peers to overcome the reflection problem and to quantitatively assess answers regarding the initial questions. We find strong evidence for herding in expectation formation. The size of effect is robust across various specifications and remains even when controlling for forecasts from experts external to the survey. The social multiplier approximately doubles the effect of information (signals) included in the model. Compared to counterfactual expectations without herding constructed from the estimates, herding seems to improve the accuracy of the expectations." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Schanne, Norbert, 2012. "The formation of experts' expectations on labour markets : do they run with the pack?," IAB-Discussion Paper 201225, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201225
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    Cited by:

    1. Christian Hutter & Enzo Weber, 2015. "Constructing a new leading indicator for unemployment from a survey among German employment agencies," Applied Economics, Taylor & Francis Journals, vol. 47(33), pages 3540-3558, July.
    2. Pauser, Johannes, 2013. "Capital mobility, imperfect labour markets, and the provision of public goods," IAB-Discussion Paper 201309, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Johann Fuchs & Enzo Weber, 2013. "A new look at the discouragement and the added worker hypotheses: applying a trend--cycle decomposition to unemployment," Applied Economics Letters, Taylor & Francis Journals, vol. 20(15), pages 1374-1378, October.
    4. Mönnig, Anke & Zika, Gerd & Maier, Tobias, 2013. "Trade and qualification : linking qualification needs to Germany's export flows," IAB-Discussion Paper 201307, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Sabine Klinger & Enzo Weber, 2016. "Decomposing Beveridge Curve Dynamics By Correlated Unobserved Components," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 877-894, December.
    6. Michael Stops, 2014. "Job matching across occupational labour markets," Oxford Economic Papers, Oxford University Press, vol. 66(4), pages 940-958.
    7. Hutter, Christian & Weber, Enzo & Schmidt, Katrin & Delfs, Silke, 2013. "Neuer Frühindikator für die Entwicklung der Arbeitslosigkeit: Startschuss für das IAB-Arbeitsmarktbarometer (A new leading indicator for unemployment: Kick-off for the IAB labor market barometer)," IAB-Kurzbericht 201320, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    Keywords

    Bundesrepublik Deutschland ; Bezugsgruppe ; Determinanten ; Einstellungsforschung ; Erwartung ; Geschäftsführer ; Informationsgewinnung ; Arbeitslosigkeitsentwicklung ; Informationsverhalten ; peer group ; Rationalität ; Arbeitsagenturen ; soziales Lernen ; Arbeitsmarktprognose ; 2008-2012;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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