NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply

Orley C. Ashenfelter, Kirk B. Doran, Bruce Schaller

NBER Working Paper No. 15746
Issued in February 2010
NBER Program(s):   LS

Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wages rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males.

download in pdf format
   (162 K)

email paper

A non-technical summary of this paper is available in the June 2010 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (162 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15746

Published: Orley Ashenfelter & Kirk Doran & Bruce Schaller, 2010. "A Shred of Credible Evidence on the Long-run Elasticity of Labour Supply," Economica, London School of Economics and Political Science, vol. 77(308), pages 637-650, October. citation courtesy of

Users who downloaded this paper also downloaded these:
Qian w14973 Quantity-Quality and the One Child Policy:The Only-Child Disadvantage in School Enrollment in Rural China
Bartel and Lichtenberg w1718 The Comparative Advantage of Educated Workers in Implementing New Technology: Some Empirical Evidence
Kleven, Knudsen, Kreiner, Pedersen, and Saez w15769 Unwilling or Unable to Cheat? Evidence from a Randomized Tax Audit Experiment in Denmark
Jackson and Schneider w16279 Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry
Malamud and Pop-Eleches w15814 Home Computer Use and the Development of Human Capital
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us