Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129653
Authors: 
Cesarini, David
Lindqvist, Erik
Notowidigdo, Matthew J.
Östling, Robert
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper 1094
Abstract: 
We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being immediate, persistent, and similar by age, education, and sex. A calibrated dynamic model of individual labor supply implies an average lifetime marginal propensity to earn out of unearned income of -0.11, and labor-supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
Subjects: 
Labor supply
household labor supply
income effect
marginal propensity to earn
substitution effect
uncompensated elasticity
compensated elasticity
Frisch elasticity
household bargaining
unitary model of the household
self-employment
taxation
JEL: 
H20
J12
J22
J24
J26
J62
Document Type: 
Working Paper

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