Unemployment expectations in an agent-based model with education

Why are unemployment expectations of the “man in the street” markedly different from professional forecasts? We present an agent-based model to explain this deep disconnection using boundedly rational agents with different levels of education. A good fit of empirical data is obtained under the assumptions that there is staggered update of information, agents update episodically their estimate and there is a fraction of households who always and stubbornly forecast that the unemployment is going to raise. The model also sheds light on the role of education and suggests that more educated agents update their information more often and less obstinately fixate on the worst possible forecast

Entrepreneurial motives and performance:Why might better educated entrepreneurs be less successful?

In a sample of newly created French firms, the impact of an entrepreneurís education on the firm's survival varies widely depending on his previous labor market situation. While it is strongly positive for the overall population, it is much weaker or insignificant for entrepreneurs who were previously unemployed or poorly matched. Our theoretical entrepreneurship model shows that these differences may be attributed to differences in unobserved human capital for better educated entrepreneurs across different initial states in the labor market. Empirical results are consistent with the theory if employers have limited information about potential entrepreneurs'human capital

The Threat Effect of Participation in Active Labor Market Programs on Job Search Behavior of Migrants in Germany

Labor market programs may affect unemployed individuals' behavior before they enroll. Such ex ante effects may differ according to ethnic origin. We apply a novel method that relates self-reported perceived treatment rates and job search behavioral outcomes, such as the reservation wage or search intensity, to each other. We compare German native workers with migrants with a Turkish origin or Central and Eastern European (including Russian) background. Job search theory is used to derive theoretical predictions. We examine the omnibus ex ante effect of the German ALMP system, using the novel IZA Evaluation Data Set, which includes self-reported assessments of the variables of interest as well as an unusually detailed amount of information on behavior, attitudes and past outcomes. We find that the ex ante threat effect on the reservation wage and search effort varies considerably among the groups considered.unemployment duration, immigrants, active labor market policy, policy evaluation, reservation wage, program evaluation, expectations, search effort

An Interview with Thomas J. Sargent

The rational expectations hypothesis swept through macroeconomics during the 1970’s and permanently altered the landscape. It remains the prevailing paradigm in macroeconomics, and rational expectations is routinely used as the standard solution concept in both theoretical and applied macroeconomic modelling. The rational expectations hypothesis was initially formulated by John F. Muth Jr. in the early 1960s. Together with Robert Lucas Jr., Thomas (Tom) Sargent pioneered the rational expectations revolution in macroeconomics in the 1970s. We interviewed Tom Sargent for Macroeconomic Dynamics .