Reference dependent preferences and labor supply in historical perspective

Daniel MacDonald and Philip Mellizo

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2017, vol. 69, issue C, 117-124

Abstract: To evaluate voluntary labor supply decisions under transitory monthly piece-rate schedules, we draw from a novel dataset on workers who originated from self-sufficient farms in New Hampshire, Vermont, and Massachusetts, and were recruited into textile mills in eastern Massachusetts in the early 19th century. Where life-cycle models of labor supply predict a positive relationship between labor supply and transitory changes in wages, we instead find negative wage-labor supply elasticities consistent with reference-dependent income targeting. Our findings contribute to the contemporary debate over the empirical validity of competing labor supply models. They also bring into question common modeling conventions in economic history that are used in the construction of historical narratives.

JEL-codes: D03 J22 N31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:69:y:2017:i:c:p:117-124

DOI: 10.1016/j.socec.2017.01.004

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