Beyond Taxis: Reference-Dependence in Rideshare Drivers' Labor Supply

Abstract

Self-employed workers provide useful evidence about the nature of flexible labor supply and possible reference-dependence. Many previous studies analyzed taxi cabdrivers. Newer rideshare platforms provide greater work hour flexibility and use surge pricing, making future marginal wages salient. We estimate stopping probability and structural labor supply models, previously applied only in the fixed-shift taxicab setting, to rideshare work. Stopping probability does increase significantly upon reaching an apparent income target. However, the degree of estimated loss aversion is much lower than in fixed-shift taxi data and does not change with experience as in taxi analyses.

JEL Classification: D01, D03, J22