Using a quasi-experimental design with pooled cross section over time model, this paper explore the effect of the financial crisis known as the Great Recession on the labor supply in Ecuador. The remittances perceived declined due to the economic contraction in the United States and Spain, so the trade-off, between leisure and work, of the remittances perceivers might be affected. When household income decreases, labor supply increases that imply a reduction in leisure time in order to offset the decline of the income (substitution effect is larger than income effect). The model suggest that the probability of working additional hours for a individual who receives remittances rose approximately 5% with greater prevalence on men, single and persons with higher years of schooling.
remittances labor supply pooled cross-section over time financial crisis probit logit