Intensive Margin Daily Labor Supply Adjustment
RCTClinical Trial
In low-income labor markets characterized by severe underemployment, workers rarely have opportunities to alter their labor supply through hourly wage adjustments or full-time salaried agreements. Instead, labor supply adjustments occur primarily along discrete daily work schedules.
Picture this
Adjusting labor supply on the intensive margin in a developing market is like a freelance handyman who cannot change his hourly rate or get a full-time contract; instead, he increases his total earnings by booking and working additional full workdays throughout the week whenever jobs become available.
What the evidence says
Urban educated men worked only 23.4 hours per week conditional on employment; acquiring 5 days of work experience increased labor supply on the intensive margin by 1 additional day worked per week on average (p < 0.10).
- Who was studied
- N = 227 urban Malawian male job seekers with secondary education in Lilongwe, Malawi (national benchmark sample: urban educated men working an average of 23.4 hours per week).
- How
- Observational baseline survey combined with instrumental variables (IV) estimation evaluating the impact of short-term employment exposure on weekly days worked.
What to do
Design active labor market policies and wage evaluations around days worked per week rather than hourly compensation rates in underemployed urban contexts.
From the source
"In this labor market, individuals are more likely to adjust their labor supply at the daily rather than the hourly margin; they are also paid per day rather than per hour."
Employment Exposure: Employment and Wage Effects in Urban Malawi