Abstract
We test whether labor supply responds symmetrically to wage increases and decreases using a randomized real effort online experiment. The results show that wage increases have smaller effects on labor supply than wage decreases of equal magnitude, especially on the extensive margin where the response to a wage decrease is twice that to a wage increase. This finding suggests that labor-supply responses to wage changes are asymmetric. We discuss the potential mechanisms behind our results including standard models of labor supply, reference dependence in consumption and reciprocity.
Original language | English |
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Article number | 102305 |
Number of pages | 13 |
Journal | Labour Economics |
Volume | 81 |
Early online date | 25 Nov 2022 |
DOIs | |
Publication status | Published - Apr 2023 |
JEL classifications
- j20 - Demand and Supply of Labor: General
- j22 - Time Allocation and Labor Supply
- j31 - "Wage Level and Structure; Wage Differentials"
- d03 - Behavioral Economics: Underlying Principles
Keywords
- labor supply
- labor supply elasticities
- assymetric effects of wages
- field experiment
- Amazon Mechanical Turk
Datasets
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Replication Data for: Asymmetric Labor-Supply Responses to Wage Changes – Experimental Evidence from an Online Labor Market
Doerrenberg, P. (Creator), Duncan, D. (Creator) & Löffler, M. (Creator), Harvard Dataverse, 14 Dec 2022
DOI: 10.7910/DVN/YDK1ZI, https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/YDK1ZI
Dataset/Software: Dataset