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Earned and unearned income: Experimental evidence on expenditures and labor supply in Malawi

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  • Ambler, Kate
  • Godlonton, Susan

Abstract

Though the differential impacts of earned and unearned income have long been of interest to economists and policymakers, the study of this question is often conflated by other differences between the income streams. We conduct a field experiment in Malawi in which we examine the differential short-term effect of earned and unearned income on the allocation of expenditures and labor supply, holding all other factors constant. All participants receive an equal size cash payment and make the same time investment; half are required to work, and half are not. Our main finding is that the work requirement results in a reallocation of labor supply away from household work in the very short term. Conversely, there is no evidence that the allocation of expenditures across categories is affected.

Suggested Citation

  • Ambler, Kate & Godlonton, Susan, 2021. "Earned and unearned income: Experimental evidence on expenditures and labor supply in Malawi," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 33-44.
    • Handle: RePEc:eee:jeborg:v:187:y:2021:i:c:p:33-44
    DOI: 10.1016/j.jebo.2021.03.039
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    More about this item

    Keywords

    Earned and unearned income; Expenditures; Time use; Malawi;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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