2017•American Economic ReviewRequires access

The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries

David Cesarini, Erik Lindqvist, Matthew Notowidigdo, Robert Östling

Abstract

We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. Winning a lottery prize modestly reduces earnings, with the reduction being immediate, persistent, and quite similar by age, education, and sex. A calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from −0.17 at age 20 to −0.04 at age 60, 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. (JEL D14, J22, J31)

About this research paper

What this paper is about

Why it matters

OpenAlex reports 294 citations for this work. Citation counts describe recorded attention and do not establish research quality.

Key contribution

A contribution statement is not available in the OpenAlex record.

Method / approach

Method details are not available in the OpenAlex metadata.

Main findings

Findings are not separately available in the OpenAlex metadata.

Limitations

Limitations are not available in the OpenAlex metadata.

Applications

Application details are not available in the OpenAlex metadata.

Available abstract

Key concepts: Economics, Lottery, Earnings, Labour economics, Unearned income, Demographic economics, Microeconomics, Gross income