Showing papers by "Giorgio Topa published in 2016"

Do Informal Referrals Lead to Better Matches? Evidence from a Firm’s Employee Referral System

Abstract: Using a new firm-level data set that includes explicit information on referrals by current employees, we investigate the hiring process and the relationships among referrals, match quality, wage trajectories, and turnover for a single US corporation and test various predictions of theoretical models of labor market referrals. We find that referred candidates are more likely to be hired; experience an initial wage advantage, which dissipates over time; and have longer tenure in the firm. Further, the variances of the referred and nonreferred wage distributions converge over time. The observed referral effects appear to be stronger at lower skill levels. The data also permit analysis of the role of referrer-referee pair characteristics.

The Price Is Right: Updating Inflation Expectations in a Randomized Price Information Experiment

Abstract: Using a unique, randomized information experiment embedded in a survey, this paper investigates how consumers’ inflation expectations respond to new information. We find that respondents, on average, update their expectations in response to (certain types of) information, and do so sensibly, in a manner consistent with Bayesian updating. As a result of information provision, the distribution of inflation expectations converges toward its center and cross-sectional disagreement declines. We document heterogeneous information processing by gender and present suggestive evidence of respondents forecasting under asymmetric loss. Our results provide support for expectation-formation models in which agents form expectations rationally but face information constraints.

An Overview of the Survey of Consumer Expectations

Abstract: This report presents an overview of the Survey of Consumer Expectations, a new monthly online survey of a rotating panel of household heads. The survey collects timely information on consumers’ expectations and decisions on a broad variety of topics, including but not limited to inflation, household finance, the labor market, and the housing market. There are three main goals of the survey: (1) measuring consumer expectations at a high frequency, (2) understanding how these expectations are formed, and (3) investigating the link between expectations and behavior. This report discusses the origins of the survey, the questionnaire design, the implementation of the survey and the sample, and computation of various statistics that are released every month. We conclude with a discussion of how the results are disseminated, and how the (micro) data may be accessed.

Subjective Intertemporal Substitution

Abstract: We estimate the elasticity of intertemporal substitution (EIS)—the elasticity of expected consumption growth with respect to variation in the real interest rate—using subjective expectations from the newly released FRBNY Survey of Consumer Expectations (SCE). This dataset is unique, since it includes consumers’ expectations of both consumption growth and inflation, with the latter providing subjective variation in ex ante real interest rates. As a result, we can estimate a subjective version of the consumption Euler equation, without having to take a stand on the process of expectation formation. Our main finding is that this subjective EIS is precisely and robustly estimated to be around 0.8 in the general population, consistent with typical macroeconomic calibrations of the Euler equation. However, we find some evidence that the EIS rises to slightly above one for high-income individuals, consistent with the assumptions in asset pricing models featuring long-run risks or rare disasters.

The Price Is Right: Updating Inflation Expectations in a Randomized Price Information Experiment

Abstract: Using a unique, randomized information experiment embedded in a survey, this paper investigates how consumers’ inflation expectations respond to new information. We find that respondents, on average, update their expectations in response to (certain types of) information, and do so sensibly, in a manner consistent with Bayesian updating. As a result of information provision, the distribution of inflation expectations converges toward its center and cross-sectional disagreement declines. We document heterogeneous information processing by gender and present suggestive evidence of respondents forecasting under asymmetric loss. Our results provide support for expectation-formation models in which agents form expectations rationally but face information constraints. A fuller understanding of the public’s learning rules would improve the central bank’s capacity to assess its own credibility, to evaluate the implications of its policy decisions and communications strategy, and perhaps to forecast inflation.

Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle

Abstract: The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.” If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors, and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two thirds of the deviations from trend-growth in UK labor productivity since 2007.

An overview of the Survey of Consumer Expectations

Abstract: This report presents an overview of the Survey of Consumer Expectations, a new monthly online survey of a rotating panel of household heads The survey collects timely information on consumers? expectations and decisions on a broad variety of topics, including but not limited to inflation, household finance, the labor market, and the housing market There are three main goals of the survey: (1) measuring consumer expectations at a high frequency, (2) understanding how these expectations are formed, and (3) investigating the link between expectations and behavior This report discusses the origins of the survey, the questionnaire design, the implementation of the survey and the sample, and computation of various statistics that are released every month We conclude with a discussion of how the results are disseminated, and how the (micro) data may be accessed

How Do People Revise Their Inflation Expectations

Abstract: The New York Fed started releasing results from its Survey of Consumer Expectations (SCE) three years ago, in June 2013. The SCE is a monthly, nationally representative, internet-based survey of a rotating panel of about 1,300 household heads. Its goal, as described in a series of Liberty Street Economics posts, is to collect timely and high-quality information on consumer expectations about a broad range of topics, covering both macroeconomic variables and the households' own situation. In this post, we look at what drives changes in consumer inflation expectations. Do people respond to changes in recent realized inflation, and to expected and realized changes in prices of salient individual commodities?like gasoline? Understanding what drives inflation expectations is important for the conduct of monetary policy, since it improves a central bank?s ability to assess its own credibility and to evaluate the impact of its policy decisions and communication strategy.