Payday and the Monthly Attention Cycle of Low-Wage Workers

Claire Lelarge ()
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Claire Lelarge: Université Paris-Saclay, RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay, CEPR - Center for Economic Policy Research

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Abstract: Using linked survey and administrative wage records, we measure workers' financial monitoring through the accuracy of their self-reported earnings. An unsupervised latent-class model distinguishes transitory reporting errors from rounding behavior and persistent reporting biases, allowing us to interpret lower reporting uncertainty as more precise knowledge of one's wages. Among low-wage workers, reporting precision exhibits a pronounced pay-cycle pattern: it increases by approximately 12 percent in the days leading up to payday and declines immediately afterward. No comparable pattern emerges among higherwage workers. These findings suggest that predictable liquidity constraints lead low-wage workers to monitor their personal finances more closely as payday approaches.

Keywords: Attention; wages; financing constraints; mixture latent class models; unsupervised clustering (search for similar items in EconPapers)
Date: 2026-07-20
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