I replicate and extend the seminal work of Camerer et al. (“Labor Supply of New York City Cabdrivers: One Day at a Time,” Quarterly Journal of Economics, 112 1997, 407–441), who find that the wage ...elasticity of daily hours of work for New York City taxi drivers is negative and conclude that their labor supply behavior is consistent with reference dependence. In contrast, my analysis of the complete record of all trips taken in NYC taxi cabs from 2009 to 2013 shows that drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities. Additionally, using a discrete choice stopping model, the probability of a shift ending is strongly positively related to hours worked but at best weakly related to income earned. I find substantial heterogeneity across drivers in their elasticities, but the estimated elasticities are generally positive and rarely substantially negative. I find that new drivers with smaller elasticities are more likely to exit the industry, whereas drivers who remain quickly learn to be better optimizers (have positive labor supply elasticities that grow with experience). These results are consistent with the neoclassical optimizing model of labor supply and suggest that consideration of gain-loss utility and income reference dependence is not an important factor in the daily labor supply decisions of taxi drivers.
Data are used from the 1984–2016 Displaced Workers Surveys (DWS) to investigate the incidence and consequences of job loss, 1981–2015. These data show a record high rate of job loss in the Great ...Recession, with serious employment consequences for job losers, including very low rates of re-employment and difficulty finding full-time employment. The average reduction in weekly earnings for job losers making a full-time–full-time transition are relatively small, with a substantial minority reporting earning more on their new job than on the lost job. Most of the cost of job loss comes from difficulty finding new full-time employment.
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. (JEL J22, L92)
Abstract
U.S. income inequality has varied inversely with union density over the past 100 years. But moving beyond this aggregate relationship has proven difficult, in part because of limited ...microdata on union membership prior to 1973. We develop a new source of microdata on union membership dating back to 1936, survey data primarily from Gallup (N ≈ 980,000), to examine the long-run relationship between unions and inequality. We document dramatic changes in the demographics of union members: when density was at its mid-century peak, union households were much less educated and more nonwhite than other households, whereas pre-World War II and today they are more similar to nonunion households on these dimensions. However, despite large changes in composition and density since 1936, the household union premium holds relatively steady between 10 and 20 log points. We use our data to examine the effect of unions on income inequality. Using distributional decompositions, time series regressions, state-year regressions, as well as a new instrumental-variable strategy based on the 1935 legalization of unions and the World War II–era War Labor Board, we find consistent evidence that unions reduce inequality, explaining a significant share of the dramatic fall in inequality between the mid-1930s and late 1940s.
The labor supply of taxi drivers is consistent with the existence of intertemporal substitution. My analysis of the stopping behavior of New York City cabdrivers shows that daily income effects are ...small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point. This is in contrast to the analysis of Camerer et al., who find that the daily wage elasticity of labor supply of New York City cabdrivers is substantially negative, implying large daily income effects. This difference in findings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by Camerer et al.
In response to the recession of 2007–2009, the maximum duration of U.S. unemployment insurance (UI) benefits was extended to an unprecedented 99 weeks. We exploit variation in the timing and size of ...the UI benefit extensions across states to estimate their overall impact on unemployment exits, comparing the most recent and prior extension episodes. We find a small but statistically significant increase in labor force attachment due to extended UI in both periods with little or no impact on job finding. Despite these small estimates, extended benefits can account for a substantial share of the increase in long-term unemployment.
Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. ...Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.
We use a résumé audit study to investigate the role of employment and unemployment histories in callbacks to job applications. We find that applicants with 52 weeks of unemployment have a lower ...callback rate than those with shorter spells. There is no relationship, however, between spell length and callback among applicants with spells of 24 weeks or less. We also find that both younger and older applicants have a lower callback probability than prime-aged applicants. Finally, we find that applicants who are employed at the time of application have a lower callback rate than do unemployed applicants.
The labor market in the Great Recession and its aftermath is characterized by great difficulty in escaping unemployment. I present two empirical analyses of a particular explanation for that ...difficulty, that the housing market crisis has prevented the unemployed from selling their homes and moving to take new jobs. First, I examine post-job-loss mobility rates by home ownership status using data from the Displaced Workers Survey. Second, I examine mobility rates for unemployed homeowners and renters from the month-to-month CPS match. Neither analysis provides any support for the idea that the housing market crisis has reduced mobility of the unemployed. PUBLICATION ABSTRACT
We summarize findings from an audit study investigating how unemployment duration, age, and holding a low-level “interim” job affect the likelihood that experienced college-educated females applying ...for administrative support jobs receive a callback from potential employers. The results show no relationship between callback rates and unemployment duration. In contrast, workers age 50 and older and workers with an “interim” job are significantly less likely to receive callbacks. We also summarize disparate findings in the growing literature of resume-based audit studies of career histories, and discuss avenues in which the literature could achieve results that are more comparable and externally valid.
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