Count Your Losses, and Cut Your Blessings: Reference Dependence across Intertemporal and Uncompensated Labor Supply

Do workers always work more for more? We investigate how intertemporal and uncompensated labor supply decisions change across observational and experimental windows, within the same workers. Combining a real-effort emoji-counting experiment on Prolific with observational data from platform administrative records, self-reported expectations and recalls, and smartphone-based screen-time logs, we find that expectations, and how easily accessible these are, play a central role in determining which kind of elasticities are observed. Uncompensated margins, in fact, diverge across windows and converge towards intertemporal elasticities in the observational window, where expectations lose power and income effects disappear. Similarly, intertemporal responses get loss-averse when expectations are more distant: wage losses retain an elastic effect while gains are rapidly discounted. Workers' behavior is thus simultaneously neoclassical and reference-dependent, as the type of response is largely determined by how wage changes are framed with reference to expectations or previous realizations.

Source: arXiv:2605.29832v1 - http://arxiv.org/abs/2605.29832v1 PDF: https://arxiv.org/pdf/2605.29832v1 Original Link: http://arxiv.org/abs/2605.29832v1