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Field
Abstract
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Before
We study the effect of wealth on individual and household labor supply using administrative
data for a large sample of lottery players in Sweden. We find that winning a lump-sum
lottery prize modestly reduces labor earnings, with pre-tax earnings declines over the first
10 years totaling roughly 10 percent of the prize. Earnings reductions are fairly constant
over time and similar by age, gender, education, and pre-win earnings levels. We estimate
a dynamic labor supply model and show that it can account for the results both over the
life cycle and across the earnings distribution, and we use the estimated model to recover
key labor supply elasticities. Lastly, we find much larger earnings responses for winners
than their spouses, regardless of the gender of the winner; this is inconsistent with unitary
household labor supply models which pool exogenous unearned income within the
household.
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After
We study the effect of wealth on individual and household labor supply using administrative data for a large sample of lottery players in Sweden. We find that winning a lump-sum lottery prize modestly reduces labor earnings, with pre-tax earnings declines over the first 10 years totaling roughly 10 percent of the prize. Earnings reductions are fairly constant over time and similar by age, gender, education, and pre-win earnings levels. We estimate a dynamic labor supply model and show that it can account for the results both over the life cycle and across the earnings distribution, and we use the estimated model to recover
key labor supply elasticities. Lastly, we find larger earnings responses for winners than their spouses, regardless of the gender of the winner; this is inconsistent with unitary household labor supply models which pool exogenous unearned income within the household.
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Trial Start Date
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Before
January 01, 1994
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After
January 01, 1986
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JEL Code(s)
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Before
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After
J22
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Last Published
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Before
October 14, 2016 09:20 PM
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After
October 18, 2016 03:51 AM
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Intervention Start Date
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Before
January 01, 1994
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After
January 01, 1986
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Experimental Design (Public)
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Before
In this paper, a large data set of lottery participants in Sweden was analyzed in a the framework of a randomized controlled experiment to study the effect of wealth on the labor earnings of individuals and households. Three separate samples of Swedish lottery players were used, comprising roughly two million individuals in total, which were matched to administrative data on labor earnings of lottery participants, labor earnings of their spouses, and a large number of socioeconomic and demographic variables. The first sample is a panel of around two million Swedish individuals who held "prize-linked savings" accounts in the 1980s and 1990s. These accounts incorporate a lottery element by randomly awarding prizes to some accounts rather than paying them interest. The second sample consisted of individuals who participated in a monthly Swedish subscription lottery called Kombilotteriet between 1998 and 2011. The final sample contained scratch lottery ticket winners who qualified for a televised draw at some point between 1994 and 2010 where they could win substantial amounts of money. These three samples were used to study the long-run effects of shocks to wealth, and to estimate heterogenous wealth effects across a wide range of demographic characteristics.
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After
In this paper, a large data set of lottery participants in Sweden was analyzed in a the framework of a randomized controlled experiment to study the effect of wealth on the labor earnings of individuals and households. Three separate samples of Swedish lottery players were used, comprising roughly two million individuals in total, which were matched to administrative data on labor earnings of lottery participants, labor earnings of their spouses, and a large number of socioeconomic and demographic variables. The first sample is a panel of around two million Swedish individuals who held "prize-linked savings" accounts in the 1980s and 1990s. These accounts incorporate a lottery element by randomly awarding prizes to some accounts rather than paying them interest. The second sample consisted of individuals who participated in a monthly Swedish subscription lottery called Kombilotteriet between 1998 and 2011. The third sample contained scratch lottery ticket winners who qualified for a televised draw at some point between 1994 and 2010 where they could win substantial amounts of money. These three samples were used to study the long-run effects of shocks to wealth, and to estimate heterogenous wealth effects across a wide range of demographic characteristics.
The analysis and outcomes studied were not pre-registered.
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Randomization Method
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Before
(varies for each sample, see "Experimental Design" for information on how wealth was randomly assigned in each sample)
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After
Lottery
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Field
Randomization Unit
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Before
individuals
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After
Individuals
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Planned Number of Clusters
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Before
(no clusters)
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After
Standard errors clustered by individual due to multiple wins. >100K clusters.
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Planned Number of Observations
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Before
around 2 million individuals total
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After
Around 250K.
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Sample size (or number of clusters) by treatment arms
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Before
222,223 individuals PLS (prize-linked savings accounts)
25,427 individuals Kombi (monthly ticket-subscription lottery)
3,267 TRISS (scratch-ticket lottery)
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After
About 200K individuals PLS (prize-linked savings accounts), 25K for Kombi (monthly ticket-subscription lottery) and 3K for TRISS (scratch-ticket lottery).
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Field
Did you obtain IRB approval for this study?
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Before
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After
Yes
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