MOB Seminar Series: Linh Tô, Harvard University

Title: Daily Labor Supply and Adaptive Reference Points

2018.06.15 | Bodil Krog

Date Fri 22 Jun
Time 12:00 13:00
Location Fuglesangs Allé 4, 8210 Aarhus V, building 2621(B), room 04

Presenter: Linh Tô, Harvard University

Title (and link to paper): Daily Labor Supply and Adaptive Reference Points (with Neil Thakral)

Abstract: We document evidence of high-frequency reference-point adjustment in the field. Analyzing a dataset of all New York City cab fares in 2013 using nonparametric methods, we find reductions in cabdriver labor supply in response to higher accumulated daily earnings and stronger effects for more recent earnings. The income effect is inconsistent with the neoclassical model and the nonfungibility of daily income rejects models invoking daily income targets. To explain the evidence, we incorporate adaptive reference points into models of loss aversion and salience. While loss aversion tends to overstate the main quantitative features of the data, both models capture the qualitative features.

Organizer: Alexander Koch

MOB Seminars