TY  - JOUR
AU  - Munasinghe,Lalith
AU  - Sicherman,Nachum
TI  - Wage Dynamics and Unobserved Heterogeneity: Time Preference of Learning Ability?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11031
PY  - 2005
Y2  - January 2005
UR  - http://www.nber.org/papers/w11031
L1  - http://www.nber.org/papers/w11031.pdf
N1  - Author contact info:
Nachum Sicherman
Graduate School of Business
Columbia University
3022 Broadway, 819 Uris
New York, NY 10027
Tel: 212/854-4464
Fax: 212/854-9895
E-Mail: nachum.sicherman@columbia.edu
AB  - 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.
ER  -