Are Singaporean Cabdrivers Target Earners?

43 Pages Posted: 11 Oct 2013 Last revised: 27 Mar 2015

Sumit Agarwal

Georgetown University - Department of Finance

Mi Diao

National University of Singapore (NUS) - Department of Real Estate

Jessica Pan

National University of Singapore (NUS)

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Date Written: March 22, 2015

Abstract

We use a unique administrative dataset of over 10,000 taxi drivers in Singapore to study the labor supply decisions of these drivers. Our study uses a high frequency dataset to test whether cabdrivers exhibit reference-dependence preferences. We estimate cabdrivers’ day and day-of-the-week hours and income targets using ex-post data, and find that the targets have a strong and positive impact on cabdrivers’ probability of stopping work. Cabdrivers with high cumulative hours and/or cumulative income for the day are more likely to stop work earlier when they reach their hour and income targets. We also find that cabdrivers’ income targets are independent of ex-post positive and negative daily income shocks, and that their targeting behavior is persistent. The results support the idea that rational expectations underpin reference-dependence in the labor supply decisions of cabdrivers in our sample.

Keywords: Labor Supply, Reference Dependent Preferences, Cab Drivers

JEL Classification: J22, B49

Suggested Citation

Agarwal, Sumit and Diao, Mi and Pan, Jessica and Sing, Tien Foo, Are Singaporean Cabdrivers Target Earners? (March 22, 2015). Available at SSRN: https://ssrn.com/abstract=2338476 or http://dx.doi.org/10.2139/ssrn.2338476

Sumit Agarwal

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)

HOME PAGE: http://www.ushakrisna.com

Mi Diao

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Jessica Pan

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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