How much does hard work matter?

 [[{“value”:”That is the topic of my latest Bloomberg column, here is one excerpt: Economists from Princeton, Vanderbilt and the Federal Reserve Bank of St. Louis have estimated just how much hard work contributes to inequality in lifetime earnings. While the answer depends on context, they arrived at an average for the US workforce: About 20% of
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That is the topic of my latest Bloomberg column, here is one excerpt:

Economists from Princeton, Vanderbilt and the Federal Reserve Bank of St. Louis have estimated just how much hard work contributes to inequality in lifetime earnings. While the answer depends on context, they arrived at an average for the US workforce: About 20% of the variance in lifetime earnings can be explained by differences in hours worked…

The decision to work harder operates on at least two levels. First, you put in more total time, which leads to higher lifetime earnings. Second, you invest more in your human capital, which makes you more productive. Between one-third and one-half of the higher income for the harder workers stems from this human capital channel. One lesson is that if you are going to work hard, you should do so relatively early in your life, so as to reap the human capital benefits for future years.

Another crucial point is that those who work harder do so because they want to. There can be different kinds of heterogeneity in ability, including in learning capability or initial human capital. But in the researchers’ model, 90% of the variation in earnings due to hard work comes from a simple desire to work harder.

And this:

The study focuses on the US, but it has implications for Europe as well. In France, for instance, work is limited to 48 hours per week, with a standard week of 35 hours. That reduces average earnings and inequality in earnings, since it is harder for the top achievers to keep making more money. This research finds that the losers from this regulation are found at all parts of the wage distribution, not only at the top.

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 Data Source, Economics