Original source
The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries
Research manuscript
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Extensive Margin Labor Force Participation Inertia
"Figure 2A shows winning the lottery reduces labor force participation by about 2 percentage points per 1M SEK won... We also estimate a small positive, but statistically insignificant, effect of winning the lottery on retirement."
Frictionless Firm and Occupational Retention Stability
"We find no evidence that wealth affects employer, workplace, occupation, industry, or location of work... consistent with the hypothesis that changes in hours worked are likely to account for the bulk of the intensive margin response."
Intensive Margin Dominance in Labor Supply Adjustment
"Adjustments of the number of hours worked account for the majority of the overall earnings response."
Low Intertemporal and Hicksian Labor Supply Elasticities
"The individual-level compensated (Hicksian) elasticity is 0.1, and the intertemporal (Frisch) elasticity is 0.15."
Marginal Propensity to Earn Out of Wealth
"Winning a lottery prize modestly reduces earnings, with the reduction being immediate, persistent, and quite similar by age, education, and sex."
Payment Mode Equivalence Under Unconstrained Liquidity
"If winners have a significant bias to the present and Triss-Monthly winners are unable to borrow against their future income stream, we would expect bigger immediate responses from lump-sum prizes. Yet the response patterns for the two Triss lotteries are quite similar."
Scale Invariance of Marginal Labor Supply Effects
"The point estimates suggest the marginal effect of lottery wealth is smaller for larger prizes, but the difference is not statistically significant."
Self-Employment Decoupling from Liquidity Constraints
"The reduction in self-employment income is at odds with previous findings that windfall gains increase self-employment... a 1M SEK windfall gain reduces self-employment income by 7.7 percent of the annual average compared to 5.5 percent for wage earnings."
Separate Spheres Within-Marriage Threat Point Dynamics
"Instead, our results appear to be more consistent with the 'separate spheres' household model of Lundberg and Pollak (1993) that relies on bargaining with threat points internal to the marriage."
Spousal Labor Supply Underestimation Gap
"Including the response of non-winning spouses increases the labor supply response from -1.066 to -1.306. Focusing only on winners thus leads us to an underestimation of the labor supply response by 23 percent."
Tax Wedge Buffer on Total Production Value
"According to our estimate, a 100 SEK windfall is estimated to reduce the total production value by 1.412 SEK per year in the first five post-lottery years... the estimated effect on after-tax income (-0.576) is substantially smaller than the effect on total production value."