ICES Seminar in Experimental Economics and Game Theory

An Experimental Analysis of Daily Income Effects in Labor Supply

Friday, March 11, 2022 12:00 PM to 1:00 PM EST
Online Location, Zoom Meeting

ICES Seminar in Experimental Economics and Game Theory

The ICES Seminar in Experimental Economics and Game Theory of the Spring 2022 semester will feature:

Alec Brandon

Johns Hopkins University

An Experimental Analysis of Daily Income Effects in Labor Supply

 

Please contact ICES Office Manager (sbahabib@gmu.edu) for Zoom link.

 

Abstract

This study analyzes the labor supply response to a randomly assigned windfall of income or 4,492 workers on the gig economy platform Lyft. Over the year leading up to the windfall, these workers replicate an influential collection of observational studies that find labor supply responds negatively to the accumulation of daily income. Yet there is no detectable effect on the labor supply of these workers in response to the randomly assigned windfall that increases average daily income by 30 percent. A battery of heterogeneity analyses also fail to detect any effect. Specification tests reject our replications of the observational studies. When these replications use a more complete measure of daily income and more flexible controls for worker effort, most of the replications are no longer rejected and the estimated effect of daily income converges to the experimentally estimated null. Collectively these findings suggest that labor supply decisions are not made with reference to daily income and observational evidence to the contrary can be explained by non-classical measurement error and omitted variable bias.

 

For more information about the Seminar Series, please visit the Seminar Schedule homepage.

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