Malte Jacob Rattenborg defends his PhD thesis at the Department of Economics

Candidate:

Malte Jacob Rattenborg, Department of Economics, University of Copenhagen

Title:

Subjective Beliefs and the Dynamics of Job Search

Supervisors:

• Steffen Altmann, Associate Professor, Department of Economics, University of Copenhagen
• Robert Mahlstedt, Associate Professor, Department of Economics, University of Copenhagen

Assessment Committee:

• Nikolaj Arpe Harmon, Associate Professor, Department of Economics, University of Copenhagen
• Florian Zimmermann, Professor, Department of Economics, University of Bonn
• Andrea Weber, Professor, Department of Economics, Central European University

Summary:

Job search is not only highly consequential for one’s economic standing, it is also a complex and psychologically demanding endevour, requiring job seekers to understand the labor market, their personal strengths and weaknesses, and to deal with frequent rejections. This dissertation studies how unemployed workers form beliefs, sustain their motivation and make search decisions that influence their re-employment outcomes. Using a combination of theoretical modeling, novel high-frequency job search data, administrative records, and survey experiments in the field, this dissertation provides new evidence on the behavioral mechanisms underlying job search. The results show that job seekers interpret rejections from employers in a self-serving manner, predominantly attributing them to external conditions while preserving confidence in their own skills. Maintaining optimistic beliefs about abilities allows job seekers to sustain their search motivation, while insufficiently updating their reservation wages. Experimental variation confirms that perceptions of skills causally affect job search intensity. Evidence from a large-scale field experiment then shows that wage expectations play a causal role in job search and re-employment. Providing information about re-employment wages by similar workers leads job seekers to update expectations and adjust search strategies, increasing job-finding rates through different mechanisms for initially optimistic and pessimistic individuals. The dissertation further documents substantial negative duration dependence in search intensity over the unemployment spell, using novel measures of online job search activity for the universe of Danish job seekers. Job search counseling temporarily increases search intensity, with persistent effects following initial meetings but diminishing impacts of subsequent meetings. In addition, the analysis reveals pronounced heterogeneity in the direction of job search. A sizable share of unemployed workers search in occupations unrelated to their prior experience, a strategy associated with lower employment and earnings outcomes despite favorable average conditions in targeted occupations. Overall, the findings highlight the central role of subjective beliefs and psychological factors in job search behavior, and suggest that policies targeting information and beliefs can meaningfully improve re-employment outcomes.

An electronic copy of the dissertation can be requested here: lema@econ.ku.dk