Nicholas Buchholz, University of Toronto

Workers with variable earnings and flexible hours offer unique opportunities to evaluate intertemporal labor supply elasticities. Existing static analyses, however, have generated well-known puzzles, suggesting evidence of downward sloping labor supply curves. Using a large sample of shifts of New York City taxicab drivers, we estimate a dynamic optimal stopping model of drivers’ work times and quitting decisions. Our analysis demonstrates that patterns previously interpreted as behavioral biases arise from rational, forward-looking optimization. We use our model to provide new estimates of individual earnings elasticities and show that taxi drivers have similar elasticities to workers in markets where experimental evidence has been obtained. Finally, we demonstrate that market-level labor supply responses to fare changes are much smaller than individual-level responses due to equilibrium effects. This finding suggests that recent estimates of the benefits to recent earnings legislation in the taxi and ride-hail industries are overstated.

DATE: Friday, April 11, 2025

TIME: 3:30-5:00 p.m.

LOCATION: Fronczak 444