Are labor supply decisions consistent with neoclassical preferences ? evidence from Indian boat owners

Xavier Gine, Monica Martinez-Bravo and Marian Vidal-Fernandez ()

No 7820, Policy Research Working Paper Series from The World Bank

Abstract: This paper studies the labor supply of South Indian boat owners using daily labor participation decisions of 249 boat owners during seven years. It tests the standard neoclassical model of labor supply, which predicts that (i) individuals should be more likely to work when earnings are temporarily high and (ii) recent accumulated earnings should play no role in the participation decision. It finds that boat owners'labor participation depends positively on expected earnings but also on recent accumulated earnings, albeit weakly. Participation elasticities with respect to expected earnings range between 0.8 and 1.3 and about -0.05 and -0.01 with respect to changes in recent income. While the standard neoclassical model is statistically rejected, it is still a good approximation of the labor supply behavior of boat owners in southern India.

Date: 2016-09-13
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Related works:
Journal Article: Are labor supply decisions consistent with neoclassical preferences? Evidence from Indian boat owners (2017)
Working Paper: Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners (2017)
Working Paper: Are Labor Supply Decisions Consistent with Neoclassical Preferences? Evidence from Indian Boat Owners (2016)
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