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Effects of Lottery Wins on Household Labor Supply

Author

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  • Belloc, Ignacio

    (University of Zaragoza)

  • Molina, José Alberto

    (University of Zaragoza)

  • Velilla, Jorge

    (University of Zaragoza)

Abstract

This paper analyses the impact of current and past lottery wins on household labor supply in the United Kingdom using data from the British Household Panel Survey 1997-2008. Estimating individual fixed-effects models, we show that male annual hours of work do not respond to lottery wins, whilst female hours of work decrease in response to current and past lottery wins. Specifically, current female annual hours of work decrease by about 26 hours if the partner has won the lottery during that year, and about 28 hours per year if he won the lottery the previous year. When we include large lottery wins (lottery wins worth more than £500), we find a compensation effect within the household, as the recipient's spouse increases his/her hours of work. These results are inconsistent with household unitary models, and suggest that large shocks in unearned income may have a persistent impact on household behavior.

Suggested Citation

  • Belloc, Ignacio & Molina, José Alberto & Velilla, Jorge, 2023. "Effects of Lottery Wins on Household Labor Supply," IZA Discussion Papers 16327, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16327
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    References listed on IDEAS

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    1. Terence C. Cheng & Joan Costa-Font & Nattavudh Powdthavee, 2018. "Do You Have to Win It to Fix It? A Longitudinal Study of Lottery Winners and Their Health-Care Demand," American Journal of Health Economics, MIT Press, vol. 4(1), pages 26-50, Winter.
    2. Niizeki, Takeshi & Hori, Masahiro, 2019. "The effect of inheritance receipt on individual labor supply: Evidence from Japanese microdata," Japan and the World Economy, Elsevier, vol. 49(C), pages 176-186.
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    More about this item

    Keywords

    household labor supply; lottery win; fixed-effects models; British Household Panel Survey;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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