Daily targeting versus intertemporal substitution - estimating elasticities of labour supply: a case of Polish rural entrepreneurs
Economic models that explain the life-cycle of labour supply predict a positive relationship between supplied hours of work and transitory changes in wages. This paper tests this prediction using a sample of wages and hours for Polish rural entrepreneurs from Mazoweckie and Warmia-Mazury provinces collected in 2006-2008. The wages of these entrepreneurs are correlated within days but uncorrelated between days (they can choose how many hours they can work every day). Our results mainly show that computed wage elasticities tend to be positive (although not greater from zero). One possible interpretation of these finding might be that Polish rural entrepreneurs tend to "chase the profits" whenever possible across working days and opening hours, and that they follow the path of intertemporal substitution rather than set daily targets for themselves and their businesses.