Georg Duernecker (Frankfurt U) is presenting at the VJE-Seminar

10.06.2021

Georg Duernecker talks about "Perceived and Actual Labor Market Risk" on June 10, 1:15 pm - 2:30 pm

Title: Perceived and Actual Labor Market Risk (joint with A.Balleer, S.Forstner and  J.Goensch)
 
Abstract: Labor market risk is a prevalent phenomenon with important implications for individual decision making. A common approach is to assume that agents have rational expectations and therefore correctly assess the risk they face in the labor market. We use survey data for the U.S. on subjective expectations to establish that - in contrast to the common wisdom - the perceived individual labor market risk systematically differs from the actual risk and that, on average, individuals in the U.S. are vastly over-optimistic about their own labor market prospects. We use a quantitative heterogenous agents lifecycle model to assess the impact of agents' bias in the subjective labor market expectations on the lifecycle path of individual consumption, income and wealth, as well as aggregate wealth inequality. Moreover, we quantitatively explore the welfare effects of over-optimism and we derive implications for economic policy.


Website of Georg Dürnecker

VJES - Georg Duernecker