The effect of wealth on individual and household labor supply: Evidence from Swedish lotteries

We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being immediate, persistent, and similar by age, education, and sex. A calibrated dynamic model of individual labor supply implies an average lifetime marginal propensity to earn out of unearned income of -0.11, and labor-supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.

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Year of publication:	2015
Authors:	Cesarini, David ; Lindqvist, Erik ; Notowidigdo, Matthew J. ; Östling, Robert
Publisher:	Stockholm : Research Institute of Industrial Economics (IFN)
Subject:	Labor supply \| household labor supply \| income effect \| marginal propensity to earn \| substitution effect \| uncompensated elasticity \| compensated elasticity \| Frisch elasticity \| household bargaining \| unitary model of the household \| self-employment \| taxation

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Series:	IFN Working Paper ; 1094
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	844426296 [GVK] hdl:10419/129653 [Handle] RePEc:hhs:iuiwop:1094 [RePEc]
Classification:	H20 - Taxation, Subsidies, and Revenue. General ; J12 - Marriage; Marital Dissolution; Family Structure ; J22 - Time Allocation and Labor Supply ; J24 - Human Capital; Skills; Occupational Choice; Labor Productivity ; J26 - Retirement; Retirement Policies ; J62 - Occupational and Intergenerational Mobility
Source:	EconStor

Persistent link: https://www.econbiz.de/10011442484