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  4. June 2008
  5. Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • Henry S. Farber
American Economic Review
vol. 98, no. 3, June 2008
(pp. 1069–82)
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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.

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

Additional Materials

JEL Classification

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