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Intertemporal Elasticity of Labor Supply: Evidence from New York City Taxicab Drivers Using a New Instrument

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  • Kamble, Vikrant V.
  • Motghare, Swapnil

Abstract

We estimate the intertemporal elasticity of labor supply for New York City taxicab drivers using a new instrument: the type of taximeter installed in the vehicle. The two meter systems in use display different default tip percentages, generating plausibly exogenous variation in tip income and hourly pay across shifts. Assignment to the "high-default" meter raises hourly wages by 0.5 percent, entirely through tips, and increases shift hours by 0.9 percent, implying an elasticity of 1.7. These findings align with the standard neoclassical prediction that workers supply more hours when temporary pay rises and shed light on labor-supply behavior in flexible, schedule-setting work environments more broadly.

Suggested Citation

  • Kamble, Vikrant V. & Motghare, Swapnil, 2026. "Intertemporal Elasticity of Labor Supply: Evidence from New York City Taxicab Drivers Using a New Instrument," GLO Discussion Paper Series 1809, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1809
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    Keywords

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    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
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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