Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers

Henry S. Farber

American Economic Review, 2008, vol. 98, issue 3, 1069-82

Abstract: I develop a model of daily labor supply where preferences are dependent on a reference daily income level, and I apply this model to data on the labor supply of New York City taxi drivers. I find that there may be a reference level of income on a given day that affects labor supply. However, there is substantial day-to-day variation in a given driver's reference level, and most shifts end before reaching the reference income level. This pattern is inconsistent with an important role for reference-dependent preferences.

JEL-codes: J22 L92 (search for similar items in EconPapers)
Date: 2008
Note: DOI: 10.1257/aer.98.3.1069
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Citations: View citations in EconPapers (192)

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