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Does Poverty Change Labor Supply? Evidence from Multiple Income Effects and 115,579 Bags

Year: 2020

Type: report

Abstract: The income elasticity of labor supply is a central parameter of many economic models. We test the response of labor supply to exogenous changes in income using data from a randomized evaluation of a multi-faceted grant program in northern Ghana combined with a researcher-implemented bag-making operation. We find a non-negative "income effect" on labor supply. We argue that simple models with either labor or capital market frictions cannot explain the results, whereas a model that allows for positive physiological or psychological productivity effects from higher income fits with our findings.

Source: National Bureau of Economic Research

DOI: 10.3386/w27314

Authors: Abhijit Banerjee, Dean Karlan, Hannah Trachtman, Christopher Udry

Language: English

Topic: Gender, Labor, and Family Dynamics

Subfield: Gender Studies

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities

Open Access status: green

OpenAlex ID: W3033202171

Cites:

Cited by: 22

Related to: 10