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Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners

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  • Gine, Xavier

    (World Bank)

  • Martinez-Bravo, Monica

    (CEMFI, Madrid)

  • Vidal-Fernandez, Marian

    (University of Sydney)

Abstract

This paper studies the labor supply of South Indian boat owners using daily labor participation decisions of 249 boat owners during seven years. We test the standard neoclassical model of labor supply and find that boat owners' labor participation depends positively on expected earnings but also on recent accumulated earnings, albeit weakly. Participation elasticities with respect to expected earnings range between 0.8 and 1.3 and about -0.05 and -0.01 with respect to changes in recent income. While the standard neoclassical model is statistically rejected, it is a good approximation of the labor supply behavior of boat owners in southern India.

Suggested Citation

  • Gine, Xavier & Martinez-Bravo, Monica & Vidal-Fernandez, Marian, 2016. "Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners," IZA Discussion Papers 10227, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10227
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    Cited by:

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    2. Roman Horvath & Ali Elminejad & Tomas Havranek, 2020. "Publication and Identification Biases in Measuring the Intertemporal Substitution of Labor Supply," Working Papers IES 2020/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2020.
    3. Isabel Z. Martínez & Emmanuel Saez & Michael Siegenthaler, 2021. "Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays," American Economic Review, American Economic Association, vol. 111(2), pages 506-546, February.
    4. David Staines, 2023. "Stochastic Equilibrium the Lucas Critique and Keynesian Economics," Papers 2312.16214, arXiv.org.
    5. Alessandro Saia, 2022. "Trouble Underground: Demand Shocks and the Labor Supply Behavior of New York City Taxi Drivers," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(1), pages 1-27, March.
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    10. Tess M. Stafford, 2018. "Do workers work more when earnings are high?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-11, November.

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    More about this item

    Keywords

    intertemporal labor supply; daily income;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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