The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries
David Cesarini (),
Erik Lindqvist (),
Matthew Notowidigdo and
Robert Östling ()
No 21762, NBER Working Papers from National Bureau of Economic Research, Inc
We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being immediate, persistent, and similar by age, education, and sex. A calibrated dynamic model of individual labor supply implies an average lifetime marginal propensity to earn out of unearned income of -0.11, and labor-supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
JEL-codes: J22 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-lma, nep-ltv and nep-pbe
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Published as David Cesarini & Erik Lindqvist & Matthew J. Notowidigdo & Robert Östling, 2017. "The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries," American Economic Review, vol 107(12), pages 3917-3946.
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Journal Article: The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries (2017)
Working Paper: The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries (2015)
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