Anticipated Income Shock and Labor Supply
38 Pages Posted: 26 Jul 2017 Last revised: 4 Aug 2018
Date Written: July 30, 2018
We examine the impact of an anticipated income shock on Singaporean taxi labor supply. This income shock is due to a government provision allowing employees to withdraw part of their pension savings at the age of 55. The results show that salary income, number of trips, total hours worked, and active hours worked decrease after drivers reach age 55 by 3.5%, 3.2%, 1.6%, and 3.1%, respectively. The impact on labor supply is more marked right after drivers reach age 55, and the response is stronger among those with higher education or with lower salary income. Moreover, we find that the anticipated income shock decreases the extensive margin by 5.79%.
Keywords: Income shock, labor supply, pension withdrawal, taxi, intensive margin, extensive margin
JEL Classification: D1, H2, R4, R5
Suggested Citation: Suggested Citation