2008/08/01 by M. Daniele Paserman · 253 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Mathematics · Social Sciences · #Discounting #Duration (music) #Econometrics #Economic theories and models #Economics #Estimation #Financial Literacy, Pension, Retirement Analysis #Gender, Labor, and Family Dynamics #Hyperbolic discounting #Labour economics #Macroeconomics #Mathematics #Point (geometry) #Point estimation #Statistics #Unemployment #Wage
paper · doi:10.1111/j.1468-0297.2008.02175.x
published in The Economic Journal 118(531), 1418-1452 (Oxford University Press)
openalex publication_date 2008/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
This article estimates the degree of hyperbolic discounting in a job search model quantitatively, using data on unemployment spells and accepted wages from the NLSY. The results point to a substantial degree of hyperbolic discounting for low and medium wage workers. The structural estimates are then used to evaluate alternative policy interventions aimed at reducing unemployment. The estimated effects of a given policy can vary by up to 40%, depending on the assumed type of time discounting. Some interventions may raise the long‐run utility of hyperbolic workers, and at the same time reduce unemployment duration and lower government expenditures.