Does Poverty Change Labor Supply? Evidence from Multiple Income Effects and 115,579 Bags

Dean Karlan, Abhijit Banerjee, Hannah Trachtman and Christopher Udry

No 14812, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The income elasticity of labor supply is a central parameter of many economic models. We test the response of labor supply and effort to exogenous changes in income using data from a randomized evaluation of a multi-faceted grant program in northern Ghana combined with a bagmaking operation that we implemented. We find strong evidence of a positive "income effect" on labor supply. We argue that simple models with either labor or capital market frictions cannot explain the results, whereas a model that allows for positive physiological or psychological productivity effects from higher income fits with our findings.

Keywords: Poverty; Labor supply; Income elasticity (search for similar items in EconPapers)
JEL-codes: H31 J22 O12 (search for similar items in EconPapers)
Date: 2020-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://cepr.org/publications/DP14812 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Does Poverty Change Labor Supply? Evidence from Multiple Income Effects and 115,579 Bags (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:14812

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14812

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().