Time preferences and career investments

•We examine how time preferences affect career investments and mobility.•Workers can invest in work effort and on-the-job search.•Patience is positively related to work and search effort.•The relation between patience and job mobility is ambiguous.

This paper examines the role of time preferences in career investments. We focus on the effects of patience on two types of career investments: work effort and on-the-job search. Whereas the former increases the probability of obtaining a promotion, the latter affects the chance of receiving an outside job offer. We propose a theoretical career model which allows for these two distinct career paths. To test the theoretical predictions, we make use of the DNB Household Survey. This large Dutch longitudinal survey contains detailed information on individual time preferences, on-the-job search behaviour and indicators of work effort. The results show that on-the-job search and work effort increase with patience. The relation between patience and job mobility is more ambiguous. These findings may be hard to reconcile with standard on-the-job search models but can be rationalized by models in which work effort and on-the-job search are substitutes.