Career Consequences of Hyperbolic Time Preferences

In this paper I address theoretically and assess empirically the effect of impatience on workers’ on-the-job behavior. Theoretically, workers ’ hyperbolic time preferences and the implied self-control problems explain several empirical regularities concerning job mobility and account for different on-the-job behaviors. Empirically, the effect of various measures of impatience on the relevant variables confirms the prediction of the model. On-the-job search on one hand and ”col-laborative behaviors ” such as number of working hours, low absence rate, and effort on the other, are crucial aspects of mobility and individual wage growth. On-the-job search results in higher wages with the new employer while ”collaborative behaviors ” lead to permanent wage increases with the same employer, mainly through promotion or position change. I provide a model that shows that, for identically productive individuals, heterogeneity in hyperbolic time preferences ac-counts for different mobility and career patterns. Patient workers undertake behaviors that lead to promotions, they are more likely to be stayers and to follow fast-track-career paths with the same employer. Impatient workers are more likely to be movers and to experience wage increases by switching jobs. Hence, differences between stayers and movers are explained in terms of time preferences. I use a large longitudinal data set (NLSY 79) to test the main conclusion of the model implementing logit, panel and duration estimations. Various measures of impatience are positively correlated to the job arrival rate and negatively correlated to collaborative behaviors that lead to promotion and to large wage increase on the same job