Camerer, Colin F. and Babcock, Linda and Loewenstein, George and Thaler, Richard (1997) Labor Supply of New York City Cabdrivers: One Day at a Time. Quarterly Journal of Economics, 112 (2). pp. 407-441. ISSN 0033-5533 http://resolver.caltech.edu/CaltechAUTHORS:20110210-140549107
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Life-cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages. We tested this prediction using three samples of wages and hours of New York City cabdrivers, whose wages are correlated within days but uncorrelated between days. Estimated wage elasticities are significantly negative in two out of three samples. Elasticities of inexperienced drivers average approximately −1 and are less than zero in all three samples (and significantly less than for experienced drivers in two of three samples). Our interpretation of these findings is that cabdrivers (at least inexperienced ones): (i) make labor supply decisions “one day at a time” instead of intertemporally substituting labor and leisure across multiple days, and (ii) set a loose daily income target and quit working once they reach that target.
|Additional Information:||© 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology. Posted Online March 30, 2006. Many thanks to Bruce Schaller (NYC Taxi and Limousine Commission) for data and helpful discussions; James Choi, Kim Morgan, and Dov Rosenberg for research assistance; Charles Brown, Jeffrey Dominitz, John Engberg, John Ham, Seth Sanders, and Lowell Taylor for helpful discussions; Andrei Shleifer for the Weber quote; two referees, and editor Lawrence Katz for extraordinarily thorough comments, and colleagues at many workshops: The Caltech brown bag lunch seminar, NBER Behavioral Labor Economics meeting, and Behavioral Economics Summer Camp (sponsored by the Russell Sage Foundation), Carnegie Mellon University's Heinz School of Public Policy and Management, the University of California (Irvine and Berkeley) Departments of Economics, the MIT/Harvard Behavioral Economics seminar, the University of Chicago Labor Workshop, the Judgment/Decision Making Society, and the Econometric Society meetings.|
|Official Citation:||Labor Supply of New York City Cabdrivers: One Day at a Time The Quarterly Journal of Economics (1997) 112(2): 407-441 doi:10.1162/003355397555244|
|Usage Policy:||No commercial reproduction, distribution, display or performance rights in this work are provided.|
|Deposited By:||Tony Diaz|
|Deposited On:||14 Feb 2011 19:28|
|Last Modified:||26 Dec 2012 12:55|
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