(), Erik Lindqvist
(), Matthew J. Notowidigdo
() and Robert Östling
David Cesarini: New York University, Postal: and Research Institute of Industrial Economics (IFN), Stockholm, Sweden
Erik Lindqvist: Stockholm School of Economics, Postal: NBER,and Research Institute of Industrial Economics (IFN), Stockholm, Sweden
Matthew J. Notowidigdo: Northwestern University, Postal: and NBER
Robert Östling: Institute for Interntional Economic Studies (IIES), Postal: Stockholm University
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.
Keywords: Labor supply; household labor supply; income effect; marginal propensity to earn; substitution effect; uncompensated elasticity; compensated elasticity; Frisch elasticity; household bargaining; unitary model of the household; self-employment; taxation
41 pages, November 23, 2015
Full text files
wp1094_Online_Appendix%202015%2011%2019_complete.pdf Online Appendix
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2018-01-23 23:34:49.