Labor Supply for Norwegian Lottery Winners

Abstract

I use the Norwegian lottery combined with the Norwegian tax report and data from A- meldingen to derive the marginal propensity to earn (MPE) out of unearned income for Nor- wegian individuals. This is done by doing a difference-in-differences analysis using all lottery winners between 2010 and 2018. The software package used is STATA. The main findings is that the MPE is -2.19 NOK per 100 NOK won in the lottery. Most of the reduction in labor supply takes place on the intensive margin, where individuals adjust the number of hours worked. As the winnings increase in size, so does the contribution of the extensive margin, where the winners choose to exit the labor market. Furthermore, the MPE shows little persistence.