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Title:Loss aversion and labor supply PDF Logo
Authors:Goette, Lorenz
Huffman, David
Fehr, Ernst
Issue Date:2003
Series/Report no.:IZA Discussion paper series 927
Abstract:In many occupations workers? labor supply choices are constrained by institutional rules regulating labor time and effort provision. This renders explicit tests of the neoclassical theory of labor supply difficult. Here we present evidence from studies examining labor supply responses in ?neoclassical environments? in which workers are free to choose when and how much to work. Despite the favorable environment the results cast doubt on the neoclassical model. They are, however, consistent with a model of reference dependent preferences exhibiting loss aversion and diminishing sensitivity.
Subjects:labor supply
intertemporal substitution
loss aversion
reference dependent
JEL:B49
J22
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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