Labor Supply of Fishermen: An Empirical Analysis
AbstractWhen income effects are small, standard life-cycle models of labor supply predict a positive response in hours worked to increases in remuneration. However, several re- cent studies have found negative wage elasticities, casting doubt on the standard labor supply model. This paper aims to resolve some of this controversy by examining the responsiveness of the daily labor supply of fishermen to transitory variations in the wage using rich data from the Florida spiny lobster fishery. The data include complete records of all fishing trips made by Florida lobster fishermen over a twenty-year period and include two measures of effort - hours at sea and, when relevant, number of traps pulled - which makes it possible to look at the intensive labor supply margin in addition to the extensive margin. Results suggest that the wage elasticity of labor supply (par- ticipation) is positive and statistically different from zero, with a range of 1.05 to 1.31 for commercial trappers and 0.76 to 1.82 for commercial divers. Results also suggest that the wage elasticity of hours worked is positive and statistically different from zero, although quite small for trappers. Specifically, the elasticity ranges from 0.06 to 0.09 for trappers and 0.82 to 0.94 for divers. Although I do not specifically test a model of reference dependent preferences, these results support the standard neoclassical model of intertemporal substitution.
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