Seminar in Economics with Jon Robinson
Research, Outreach, Seminar
2015-10-14 at 15:30
2015-10-14 at 16:45
Sveavägen 65, room 750
Jon Robinson, University of California Santa Cruz
The Daily Grind: Cash Needs, Labor Supply and Self-Control
This paper studies the intertemporal labor supply decisions of bicycle taxi drivers in Western Kenya, using detailed observational data constructed from daily passenger-level logbooks. The logbooks included a question on whether respondents had a particular cash need on a given day and, if so, how much money was required to deal with this need. To test between models of labor supply, we provide drivers with random cash payouts on unannounced days. We document four key facts: (1) drivers work more in response to both unexpected and expected cash needs; (2) drivers display a negative wage elasticity, supplying less labor on high-wage days; (3) drivers increase the probability of quitting discontinuously at the need; but (4) randomized cash payouts have no effect on labor supply. The results are consistent with a model in which workers have reference-dependent preferences over an earned income target.