This paper uses direct measures of literacy to examine the influence of cognitive and unobserved skills on earnings. We find that cognitive skills contribute significantly to earnings and that their inclusion in earnings equations reduces the measured impact of schooling. The impact of literacy on earnings does not vary across quantiles of the earnings distribution; schooling and literacy do no...

Economic models typically allow for “free disposal” or “reversibility” of information, which implies non-negative value. Building on previous research on the “curse of knowledge” we explore situations where this might not be so. In three experiments, we document situations in which participants place positive value on information in attempting to predict the performance of uninformed others, ev...

Analysts often provide forecasts of one-year ahead earnings, earnings two-year ahead, as well as long-term earnings growth rates. In our attempts to understand the properties of these contemporaneous multi-period earnings forecasts, we begin by examining whether analysts’ earnings forecasts can be described using the linear information dynamics (LID). We find that LID is an appropriate descript...

Groups that are often treated separately in studies of earnings inequality -women and minorities -are included in a general decomposition of sources of such disparity among fulltimelfull-year labor force participants. In order to consider several possible sources of earnings inequality, a new decomposition is developed that allows semilog earnings models to be decomposed into inequality factors...

The effective tax on earnings embodied in the Social Security retirement earnings test has been as high as 50 percent. Despite numerous empirical studies, there is surprisingly little agreement about whether the earnings test affects male labor supply. In this paper, we provide a comprehensive analysis of the earnings test for men using longitudinal administrative earnings data and more commonl...

This study investigates the relationship between earnings management and equity liquidity, positing that as incentives arise for the manipulation of firm performance through earnings management (due partly to conflicts of interest between firm insiders and outsiders), greater earnings management may signal higher adverse selection costs. If earnings manipulation reveals aggressive accounting pr...