We introduce a model of labor supply that considers the immaterial sustenance value of work per se. We suggest that people ask for compensation when increasing work hours but also when reducing work hours even when continuing to work part-time. Based on survey results, we show that the reference...

This paper shows theoretically (based on loss aversion) and experimentally that the replacement rate between allowance and salary is above one when moving from work to welfare. When moving from welfare to work the replacement rate is lower than one.