Daily Labor Supply of Stadium Vendors: An Empirical Analysis of Participation and Effort Decisions

Author
Abstract

This paper analyzes the labor supply behavior of food and beverage vendors at a
single major league baseball stadium over an entire season. In contrast to the conven-
tional labor supply model, the vendors who I study are paid a pure commission rather
than an hourly wage, choose whether to work (participation) and how hard to work (ef-
fort) rather than how long to Work (hours), and influence the prevailing “wage” at the
stadium through their joint labor supply decisions. I develop a model of vendor labor
supply behavior that addresses these unique aspects of a vendor’s labor supply decision
and from it derive an empirical framework for estimating the relevant labor supply
elasticities. The main result from the empirical analysis is that vendor labor supply
elasticities are positive and substantial on both the participation and effort margins; an
increase in ez ante expected earnings raises the probability of participation and, con-
ditional on aggregate vendor participation, greater attendance appears to elicit higher
levels of vendor effort. The estimates also suggest that the elasticity of vendor effort
with respect to the commission rate is positive and large. Finally, a brief analysis of the
profit maximization problem of the firm that hires the vendors as agents suggests that
the estimated labor supply elasticities probably slightly understate the true elasticities.

Year of Publication
1997
Number
383
Date Published
06/1997
Publication Language
eng
Citation Key
The Journal of Political Economy, Vol. 107, No. 2, April, 1999
URL
Working Papers