Macroeconomic Sentiments and the Job Search Behavior

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Employed workers who expect the labor market to worsen perceive a greater risk of losing their own jobs and search more intensively while employed. Using survey data, I show that this relationship is driven by workers' fear of job loss rather than by their expectations about finding a new job. I interpret the pattern as precautionary on-the-job search: workers look for outside offers to protect themselves against the possibility of unemployment. To quantify this channel, I embed the behavior in a search-and-matching model that separates precautionary search from ordinary job-ladder search. The model matches the empirical search response, offer receipt, total employer-to-employer mobility, and the share of employer-to-employer moves related to job loss. The calibrated model implies that job-loss beliefs matter for how much employed workers search and for the cyclicality of that search.

Belief Shocks and Labor Market Dynamics

What Determines Household Expectations? with Aditi Singh

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This paper uses daily data on household expectations to examine what causes households to adjust their expectations about the future of the economy. We analyze several macro variables of policy interest and find that households respond primarily to movements in the unemployment rate. Further, these responses are non-linear and asymmetric, with households displaying higher sensitivity to larger shocks and to negative information indicating a worsening of the economy. We also find heterogeneity across local labor markets: Households in areas with higher local unemployment are more sensitive to changes in national unemployment than those in areas with lower local unemployment. We further examine whether the media plays a role in influencing household expectations, and find that news about unemployment rises sharply during a recession, consistent with the response of expectations.

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