New York City Cabdrivers’ Labor Supply Revisited: Reference-Dependent Preferences with Rational-Expectations Targets for Hours and Income
37 Pages Posted: 27 May 2011
Date Written: June 21, 2010
Abstract
This paper proposes a model of cabdrivers’ labor supply, building on Henry S. Farber’s (2005, 2008) empirical analyses and Botond Kőszegi and Matthew Rabin’s (2006; henceforth “KR”) theory of reference-dependent preferences. Following KR, our model has targets for hours as well as income, determined by proxied rational expectations. Our model, estimated with Farber’s data, reconciles his finding that stopping probabilities are significantly related to hours but not income with Colin Camerer et al.’s (1997) negative “wage” elasticity of hours; and avoids Farber’s criticism that estimates of drivers’ income targets are too unstable to yield a useful model of labor supply.
JEL Classification: D03, J22
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Reference Points and Effort Provision
By Johannes Abeler, Armin Falk, ...
-
Reference Points and Effort Provision
By Johannes Abeler, Armin Falk, ...
-
Reference Points and Effort Provision
By Johannes Abeler, Armin Falk, ...
-
A Structural Analysis of Disappointment Aversion in a Real Effort Competition
By David Gill and Victoria L. Prowse
-
A Structural Analysis of Disappointment Aversion in a Real Effort Competition
By David Gill and Victoria L. Prowse
-
Fairness and Desert in Tournaments
By David Gill and Rebecca Stone
-
Binary Payment Schemes: Moral Hazard and Loss Aversion
By Fabian Herweg, Daniel Müller, ...
-
Is the Endowment Effect a Reference Effect?
By Ori Heffetz and John A. List
-
Goal Setting as a Self-Regulation Mechanism
By Anton Suvorov and Jeroen Van De Ven