Download or read book Understanding Short-term Labor Supply Decisions written by Marc-Antoine Schmidt and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I study the short-term labor supply decisions of workers involved in flexible work arrangements. In the first chapter, I develop and estimate the first dynamic model of within-day labor supply. The model includes several factors that influence the decision to take breaks: fatigue, opportunity costs, preferences across hours of the day, and random utility shocks. I estimate the model using high-frequency data covering millions of taxi trips in New York City during an entire year. The estimated parameters indicate that the fixed costs of taking a break are high, suggesting that a policy aimed at increasing the availability of taxi parking spaces could reduce the aggregate level of fatigue. In Chapter 2, I use the previously developed model to quantify the value of flexibility and evaluate the effect of a 'mandatory breaks' policy. This chapter proposes a novel methodological approach to deal with unobserved heterogeneity: I estimate the model separately for each driver. My results show that flexibility is valued highly with the average driver in my sample requiring a 23 percent increase in revenue to accept a counterfactual fixed work schedule. I then study the effects of a realistic 'mandatory breaks' policy and show that such a policy would substantially increase the frequency of breaks but would reduce labor supply between 6 and 9 percent. Chapter 3 presents empirical evidence indicating that the daily labor supply elasticity of workers is large and negative in response to small windfall gains, contrary to the prediction of the standard neoclassical model. In the main specification, I identify windfall gains using tips received by drivers and find that the drivers respond to these shocks by decreasing their labor supply substantially. I also find that these shocks do not affect future labor supply, indicating that standard neoclassical income effects cannot explain this result. In contrast, a positive shock to average hourly earnings causes drivers' labor supply to increase, consistent with the neoclassical model. My findings suggest that increasing the wage and reducing the income earned through tips or bonuses could increase labor supply in a cost-neutral way.