Life cycle model of labour supply
The life cycle model of labour supply suggests that people who have experienced a large, unanticipated shock to their non-human wealth should work less than similar people who did not. For instance, a person who just won the lottery should work less in the future than someone else who did not. However, a recent paper by Furaker and Hedenus (2012) found quite ambiguous results for the e ect of winning the lottery on work behavior among Swedes. Can their ndings be reconciled with the life cycle labour-leisure model we studied? If not, how would we have to modify the model to explain their fndings?