An Example of Negative Wage Elasticity for YouTube Content Creators

The neoclassical model of labor supply implies a positive wage elasticity absent significant income effects. This paper documents an instance of negative wage elasticity in video production by YouTube content creators. We exploit viral videos as an exogenous source of significant wage increases and investigate the productivity dynamics around the time a channel’s video went viral, against a control group of channels that had no viral videos. Our analysis shows a significant productivity decline during the week after a video goes viral, despite the higher wages, followed by a gradual return towards pre-treatment productivity. On the other hand, we also show that productivity responds positively to smaller increases in wages. These findings are consistent with an alternative model of labor supply, where workers exhibit income targeting