Nber Working Paper Series Wage Dynamics and Unobserved Heterogeneity: Time Preference or Learning Ability?
نویسندگان
چکیده
A large portion of the variation in wages and wage growth rates among individuals is due to "unobserved" heterogeneity, and the source of individual heterogeneity is typically attributed to data limitations and/or the unobservability of certain productivity related factors. In this paper we develop a test that discriminates between two inherently unobservable sources of heterogeneity (both of which can clearly account for the variation in wages and wage growth rates): learning ability and workers' inter-temporal preferences (discounting). We apply this test to the large observed differences in wages and wage growth rates between smokers and non-smokers. The evidence supports the discounting hypothesis. Lalith Munasinghe Department of Economics Barnard College Columbia University 3009 Broadway New York, NY 10027 [email protected] Nachum Sicherman Graduate School of Business 819 Uris Hall Columbia University New York, NY 10027 and NBER [email protected]
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