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

Author

Listed:
  • Gine, Xavier

    () (World Bank)

  • Martinez-Bravo, Monica

    () (CEMFI, Madrid)

  • Vidal-Fernández, 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-Fernández, Marian, 2016. "Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners," IZA Discussion Papers 10227, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10227
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    References listed on IDEAS

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    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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