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Are long-term wage elasticities of labor supply more negative than short-term ones?

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  • Doran, Kirk

Abstract

Standard models imply that the wage-elasticity of labor supply is more negative the longer a wage change lasts. I observe decreasing daily hours during short-term wage increases, but not during a long-term one: daily income goals adjusted in the long-term.

Suggested Citation

  • Doran, Kirk, 2014. "Are long-term wage elasticities of labor supply more negative than short-term ones?," Economics Letters, Elsevier, vol. 122(2), pages 208-210.
  • Handle: RePEc:eee:ecolet:v:122:y:2014:i:2:p:208-210
    DOI: 10.1016/j.econlet.2013.11.023
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    References listed on IDEAS

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    1. Orley Ashenfelter & Kirk Doran & Bruce Schaller, 2010. "A Shred of Credible Evidence on the Long-run Elasticity of Labour Supply," Economica, London School of Economics and Political Science, vol. 77(308), pages 637-650, October.
    2. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1133-1165.
    3. Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 407-441.
    4. Johannes Abeler & Armin Falk & Lorenz Goette & David Huffman, 2011. "Reference Points and Effort Provision," American Economic Review, American Economic Association, vol. 101(2), pages 470-492, April.
    5. Vincent P. Crawford & Juanjuan Meng, 2011. "New York City Cab Drivers' Labor Supply Revisited: Reference-Dependent Preferences with Rational-Expectations Targets for Hours and Income," American Economic Review, American Economic Association, vol. 101(5), pages 1912-1932, August.
    6. Henry S. Farber, 2008. "Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers," American Economic Review, American Economic Association, vol. 98(3), pages 1069-1082, June.
    7. David Gill & Victoria Prowse, 2012. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," American Economic Review, American Economic Association, vol. 102(1), pages 469-503, February.
    8. Ernst Fehr & Lorenz Goette, 2007. "Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment," American Economic Review, American Economic Association, vol. 97(1), pages 298-317, March.
    9. Henry S. Farber, 2005. "Is Tomorrow Another Day? The Labor Supply of New York City Cabdrivers," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 46-82, February.
    10. Devin G. Pope & Maurice E. Schweitzer, 2011. "Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes," American Economic Review, American Economic Association, vol. 101(1), pages 129-157, February.
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    Citations

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    Cited by:

    1. Henry S. Farber, 2014. "Why You Can't Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers," NBER Working Papers 20604, National Bureau of Economic Research, Inc.
    2. Brodeur, Abel & Nield, Kerry, 2016. "Has Uber Made It Easier to Get a Ride in the Rain?," IZA Discussion Papers 9986, Institute for the Study of Labor (IZA).
    3. Christine L. Exley & Stephen J. Terry, 2015. "Wage Elasticities in Working and Volunteering: The Role of Reference Points in a Laboratory Study," Harvard Business School Working Papers 16-062, Harvard Business School, revised Jun 2017.
    4. Kareem Haggag & Brian McManus & Giovanni Paci, 2017. "Learning by Driving: Productivity Improvements by New York City Taxi Drivers," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 70-95, January.
    5. Tess M. Stafford, 2015. "What Do Fishermen Tell Us That Taxi Drivers Do Not? An Empirical Investigation of Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 683-710.
    6. Pascaline Dupas & Jonathan Robinson, 2013. "Daily Needs, Income Targets and Labor Supply: Evidence from Kenya," NBER Working Papers 19264, National Bureau of Economic Research, Inc.
    7. Henry S. Farber, 2014. "Why You Can't Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers," Working Papers 583a, Princeton University, Department of Economics, Industrial Relations Section..
    8. Farber, Henry S, 2014. "Why You Can't Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers," IZA Discussion Papers 8562, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Labor supply; Behavioral economics; Hours constraints;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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