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American Economic Review: Vol. 98 No. 3 (June 2008)

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Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers

Article Citation

Farber, Henry S. 2008. "Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers." American Economic Review, 98(3): 1069-82.

DOI: 10.1257/aer.98.3.1069

Abstract

I develop a model of daily labor supply where preferences are dependent on a reference daily income level, and I apply this model to data on the labor supply of New York City taxi drivers. I find that there may be a reference level of income on a given day that affects labor supply. However, there is substantial day-to-day variation in a given driver's reference level, and most shifts end before reaching the reference income level. This pattern is inconsistent with an important role for reference-dependent preferences.

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Authors

Farber, Henry S. (Princeton U)

JEL Classifications

J22: Time Allocation and Labor Supply
L92: Railroads and Other Surface Transportation


American Economic Review


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