Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners

This paper studies the labor supply of South Indian boat owners using daily labor participation decisions of 249 boat owners during seven years. We test the standard neoclassical model of labor supply and find that boat owners' labor participation depends positively on expected earnings but also on recent accumulated earnings, albeit weakly. Participation elasticities with respect to expected earnings range between 0.8 and 1.3 and about -0.05 and -0.01 with respect to changes in recent income. While the standard neoclassical model is statistically rejected, it is a good approximation of the labor supply behavior of boat owners in southern India.

Keywords: intertemporal labor supply, daily income

JEL Classification: J22, J31

Suggested Citation: Suggested Citation

Gine, Xavier and Martinez-Bravo, Monica and Vidal-Fernandez, Marian and Vidal-Fernandez, Marian, Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners. IZA Discussion Paper No. 10227, Available at SSRN: https://ssrn.com/abstract=2846318 or http://dx.doi.org/10.2139/ssrn.2846318