Labor Studies.

• Position: National Bureau of Economic Research Program on Labor Studies report

The NBER's Program on Labor Studies met in Cambridge on April 4. Program Director Richard B. Freeman, and Lawrence F. Katz, NBER and Harvard University, organized the meeting. These papers were discussed:

Henry S. Farber, NBER and Princeton University, "The Labor Supply of New York City Cab Drivers"

Muriel Niederle, NBER and Stanford University, and Alvin E. Roth, NBER and Harvard University, "Market Culture: How Norms Governing Exploding Offers Affect Market Performance"

Juan Botero, Yale University; Simeon Djankov, World Bank; Rafael LaPorta and Andrei Shleifer, NBER and Harvard University; and Florencio Lopez-de-Silanes, NBER and Yale University, "The Regulation of Labor"

Marianne Bitler, RAND; Jonah B. Gelbach, University of Maryland; and Hilary Hoynes, NBER and University of California, Davis, "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments"

Paul Gertler, NBER and University of California, Berkeley; Manisha Shah, University of California, Berkeley; and Stefano Bertozzi, INSP, Mexico, "Risky Business: the Market for Unprotected Commercial Sex"

Paul Glewwe, University of Minnesota; Nauman Ilias, Competition Economics, Inc; and Michael Kremer, NBER and Harvard University, "Teacher Incentives"

Farber models the labor supply of taxi drivers, suggesting that because income effects in response to temporary fluctuations in daily earnings opportunities are likely to be small, cumulative hours will be much more important than cumulative income in the decision to stop work on a given day. However, if income effects are large because of very high discount and interest rates, then labor supply functions could bend backward and, in the extreme case where the wage elasticity of daily labor supply is minus one, drivers could be target earners. Indeed, earlier studies by other researchers find that the daily wage elasticity of labor supply of New York City cab drivers is substantially negative; they conclude that cab drivers probably are target earners. However, based on new data, Farber concludes that--when accounting for earnings opportunities in a reduced form with measures of clock hours, day of the week, weather, and geographic location--cumulative hours worked on the shift is a primary determinant of the likelihood of stopping work while cumulative income earned on the shift is related weakly, at best, to the likelihood of stopping work. This is consistent with the existence of inter-temporal substitution and is...