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Reservation Wages and Workers’ Valuation of Job Flexibility: Evidence from a Natural Field Experiment

Author

Listed:
  • Kuan-Ming Chen
  • Ning Ding
  • John A List
  • Magne Mogstad

Abstract

We quantify how labor supply elasticities and reservation wages vary between people and over time, and infer workers’ valuation of flexibility in their choices of work hours. Economists and policymakers are keenly interested in these quantities, especially lately with the growth in jobs that offer flexible work schedules. Our study takes advantage of a large natural field experiment at Uber, the largest ride-sharing company. Combining this experiment with high-frequency panel data on wages and individual work decisions, we estimate a dynamic labor supply model that let us recover reservation wages, labor supply elasticities, and workers’ valuation of flexibility. We also show the biases in reservation wages and labor supply elasticities that arise if one uses observational data on wages or a static labor supply model.

Suggested Citation

  • Kuan-Ming Chen & Ning Ding & John A List & Magne Mogstad, 2025. "Reservation Wages and Workers’ Valuation of Job Flexibility: Evidence from a Natural Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 23(6), pages 2165-2211.
    • Handle: RePEc:oup:jeurec:v:23:y:2025:i:6:p:2165-2211.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvaf022
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    1. is not listed on IDEAS
    2. Joshua D. Gottlieb & Avi Zenilman, 2020. "When Nurses Travel: Labor Supply Elasticity During COVID-19 Surges," Working Papers 2020-166, Becker Friedman Institute for Research In Economics.
    3. Feld, Brian & Nagy, AbdelRahman & Osman, Adam, 2022. "What do jobseekers want? Comparing methods to estimate reservation wages and the value of job attributes," Journal of Development Economics, Elsevier, vol. 159(C).
    4. Clochard Gwen-Jirō & Carlos Gomez-Gonzalez & Marco Henriques Pereira, 2025. "Better the Devil You Know: Managers’ Networks, Hiring Decisions and Team Performance," ISER Discussion Paper 1275, Institute of Social and Economic Research, The University of Osaka.
    5. Marie Boltz & Bart Cockx & Ana Maria Diaz & Luz Magdalena Salas, 2023. "How does working‐time flexibility affect workers' productivity in a routine job? Evidence from a field experiment," British Journal of Industrial Relations, London School of Economics, vol. 61(1), pages 159-187, March.
    6. Banerjee, Rakesh & Bharati, Tushar & Fakir, Adnan M.S. & Qian, Yiwei & Sunder, Naveen, 2025. "Gender differences in preferences for flexible work hours: Experimental evidence from an online freelancing platform," Labour Economics, Elsevier, vol. 97(C).
    7. Boltz, Marie & Cockx, Bart & Diaz, Ana Maria & Salas, Luz Magdalena, 2020. "How does working-time flexibility affect workers’ productivity in a routine job?," ROA Research Memorandum 010, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    8. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    9. Díaz Escobar, Ana María & Salas Bahamón, Luz Magdalena & Piras, Claudia & Suaya, Agustina, 2024. "Gender Disparities in Valuing Remote and Hybrid Work in Latin America," IDB Publications (Working Papers) 13439, Inter-American Development Bank.
    10. Joshua D. Gottlieb & Avi Zenilman, 2020. "When Workers Travel: Nursing Supply During COVID-19 Surges," NBER Working Papers 28240, National Bureau of Economic Research, Inc.
    11. Kesternich, Iris & Schumacher, Heiner & Siflinger, Bettina & Valder, Franziska, 2022. "Reservation wages and labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 583-607.
    12. Mikhail Golosov & Michael Graber & Magne Mogstad & David Novgorodsky, 2024. "How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 1321-1395.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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