Abstract: In this paper, I design and implement a survey of United States workers to study the causal effect of higher inflation expectations on workers’ job search decisions. I use hypothetical scenarios to decompose and quantify the impact of inflation expectations into direct and indirect effects: Direct effects are those caused by changes in inflation expectations, keeping other expectations constant. Indirect effects are caused by spill-overs from inflation expectations to expectations about the real economy. Through a within-subject design, I identify each of these effects at the individual and aggregate levels. This decomposition improves the understanding of workers' behavior in an inflationary environment. I find that the average direct effects of inflation expectations are positive and statistically significant. On average, workers associate higher inflation with higher unemployment. This generates an indirect effect that mutes average intentions to search. There is rich heterogeneity behind these average effects, namely with respect to workers' job tenure.

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