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.
