Intertemporal substitution, weekly target earnings or both? Evidence from daily labor supply of Southern Indian Fishermen
نویسندگان
چکیده
We study the labor supply behavior of 279 South Indian shermen using daily data on labor force participation and individual value of catches from 2000 to 2007. There exist two labor supply approaches with di¤erent policy implications. On the one hand, intertemporal substitution implies that workers substitute labor for leisure when wages are temporary higher. On the other hand, target-earnings models involve a target income level, beyond which, individuals stop working. Our paper provides an empirical test of these two theories. Preliminary results provide evidence of intertemporal substitution. Estimated elasticities are signi cantly positive and range between 0.5 and 0.6. We nd weaker evidence of target-earnings behavior. Coef cients on recent earnings are signi cant and negative. In particular, at average shermens characteristics, a ten percent increase of the weekly value of catches decreases the likelihood of participation in 2.5 percentage-points.
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