Inflation Expectations and Labor Supply

Participants are randomly assigned to receive one of several information treatments providing recent, factual macroeconomic statistics. The information describes current or recent U.S. macroeconomic conditions, specifically: (i) Price Inflation Treatment (CPI): Participants receive information about the most recent U.S. CPI inflation rate over the past 12 months. (ii) Nominal Wage Inflation Treatment (Hourly Earnings): Participants receive information about recent growth in average hourly earnings in the U.S., (iii) Unemployment Rate Treatment: Participants receive information about the current U.S. unemployment rate., (iv) Control (Irrelevant Information): Participants receive information unrelated to labor market or inflation conditions (e.g., local air quality index or COVID-19 vaccination rates), designed to control for information exposure without affecting economic beliefs.

2022-04-25

2022-05-20

Macroeconomic Expectations (Expected CPI inflation over the next 12 months, Expected nominal wage (hourly earnings) inflation over the next 12 months, Expected unemployment rate over the next 12 months), Reservation wage for a short, one-time task (single-period horizon), Reservation wage for a recurring task lasting multiple months (multi-period horizon), and desired duration of working with us in months.

The project compares macroeconomic expectations and labor supply preferences (reservation wages for a single- and multiple-period HITs) before and after the information treatment. We elicit reservation wages by asking the lowest reward rate at which respondents would be willing to work with us for a similar 10-min task that they were currently completing. We also ask for how many months they would be interested in working with on a monthly frequency at specified pay. These two labor supply preference variables are used as the main dependent variables.

Subjective Probability of Labor Market Transitions (from employment to a) employment with the same employer, b) different employer, c) self-employment, d) unemployment, e) out of labor force; from unemployment to a) employment b) self-employment, c) unemployment, d) out of labor force). Minimum required raise relative to current pay to switch jobs (for employed). Minimum required pay raise or cut relative to the previous pay to accept a new job (for the unemployed).

The primary outcomes capture online labor supply preferences. The secondary outcomes describe offline labor supply preferences. They enable comparison of similarities and differences between labor supply responses to inflation expectations across settings.

This study is a randomized controlled online experiment conducted on Amazon Mechanical Turk. Participants are randomly assigned to receive information about one macroeconomic variable (price inflation, wage growth, or unemployment) or irrelevant information. The experiment measures how information-induced changes in expectations causally affect reservation wages for short- and longer-horizon online labor supply decisions as well as offline labor supply preferences. Randomized information provision serves as an instrument for generating exogenous revisions of macroeconomic expectations, allowing identification of causal effects despite expectation endogeneity.

Not available

Randomization was administered at the survey posting stage using a blocked design by posting window (defined by day and time). Specifically, we repeatedly posted batches of surveys during fixed hours on multiple days that were identical in all parts except for the ``Main Task (information treatment).''

individual

No

4,500 individuals

4,500 individuals

About 900 individuals per arm