Abstract

Co-authored by Patrick Arni (University of Bristol), Bart Cockx (Ghent University), Andrey Launov (Kent University)

Researchers have reported evidence that job seekers are too optimistic about finding a job. In this research we study whether this biased belief affects behavior, whether job seekers learn from the extent to which they receive interview invitations to their job applications, and, if they do, whether they update their beliefs in a rational (Bayesian) way. We also explore whether these beliefs can be steered by counseling. To this end, we build, and aim at estimating, a structural job search model that incorporates subjective beliefs about the arrival rate of interviews and the updating of these beliefs. We will use experimental data on Swiss older workers who have been sampled at entry in unemployment and for whom their subjective beliefs have been surveyed at various instants of the unemployment spell. Some preliminary reduced form estimates and the structural model that aims at capturing the biased (updating of) beliefs. This is very much research in progress, so comments will be most welcome.