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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

Abstract: 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)
Date: 2015-11
New Economics Papers: this item is included in nep-exp, nep-lma, nep-ltv and nep-pbe
Note: LS
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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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Related works:
Journal Article: The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries (2017) Downloads
Working Paper: The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries (2015) Downloads
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