Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36260
Authors: 
Ashenfelter, Orley C.
Doran, Kirk
Schaller, Bruce
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers 4810
Abstract: 
Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wage rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males.
Subjects: 
Labor supply
JEL: 
J22
Document Type: 
Working Paper

Files in This Item:
File
Size
110.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.