Should I Stop or Should I Go? New Evidence on the Labor Supply of Taxi Drivers in New York City

Abstract

Using a comprehensive dataset of taxi trips operated in New York City (NYC) in 2013, we revisit the labor supply patterns of taxi drivers. Our empirical specification is based on the insight that recent related findings are likely to be driven by the econometric methods applied. Our key result is that drivers are ceteris paribus more likely to end their shifts when their cumulative shift income increases, supporting the idea of reference dependent labor supply. Moreover, drivers are more likely to adhere to reference dependent behavior the more experienced they are; our results indicate that this effect is likely to be related to the driver and ownership status of more experienced drivers. We conclude that the concept of reference dependent preferences plays an important role for labor supply decisions.

Keywords: Labor Supply, Reference Dependent Preferences

JEL Classification: D01, D03, J22