Working more for more and working more for less: Labor supply in the gain and loss domains

Charles Cadsby, Fei Song and Nick Zubanov

Labour Economics, 2024, vol. 88, issue C

Abstract: We examine labor supply responses to piece rate changes relative to the reference piece rate (RR). In experimental conditions without RR, labor supply increases monotonically with the actual piece rate. In conditions with RR, labor supply increases both when the piece rate rises and falls relative to RR. This non-monotonicity in labor supply responses to piece rate changes around RR is consistent with the effects of framing a given level of income as gain or loss relative to the target level induced by RR: loss aversion makes subjects work more at a given piece rate when the implied income is in the loss rather than gain domain. However, the framing effects disappear when the piece rate could both rise or fall relative to RR.

Keywords: Labor supply; Framing; Reference points; Loss aversion; Experiment (search for similar items in EconPapers)
JEL-codes: D91 J22 J31 M52 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Working more for more and working more for less: Labor supply in the gain and loss domains (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:88:y:2024:i:c:s0927537124000289

DOI: 10.1016/j.labeco.2024.102533

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