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Anticipated Income Shock and Labor Supply

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Document pages: 38 pages

Abstract: We examine the impact of an anticipated income shock on Singaporean taxi labor supply. This income shock is due to a government provision allowing employees to withdraw part of their pension savings at the age of 55. The results show that salary income, number of trips, total hours worked, and active hours worked decrease after drivers reach age 55 by 3.5 , 3.2 , 1.6 , and 3.1 , respectively. The impact on labor supply is more marked right after drivers reach age 55, and the response is stronger among those with higher education or with lower salary income. Moreover, we find that the anticipated income shock decreases the extensive margin by 5.79 .

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