Windfall gains and labour supply: evidence from the European household panel

Table 2 Effects of windfall gains on working hours – all

Dependent variable:	Employment dummy	Working hours per week		Log working hours per week
	(1)	(2)	(3)	(4)	(5)
	FE	FE	FE IV	FE	FE IV
Windfall gains dummy	−0.00424	−0.0618	0.00194	0.00125	0.00236
	(0.00360)	(0.159)	(0.161)	(0.00365)	(0.00375)
Hourly wage		−0.831***	−0.441**
		(0.0262)	(0.203)
Log hourly wage				−0.404***	−0.197***
				(0.00610)	(0.0469)
Age	0.0823***	3.876***	3.625***	0.0564***	0.0386***
	(0.00272)	(0.121)	(0.150)	(0.00295)	(0.00464)
Age^2	−0.000986***	−0.0452***	−0.0439***	−0.000490***	−0.000391***
	(3.09e-05)	(0.00137)	(0.00142)	(3.40e-05)	(3.88e-05)
Married dummy	0.0129*	1.205***	1.157***	0.0146**	0.00932
	(0.00680)	(0.301)	(0.312)	(0.00671)	(0.00708)
Children 0–6 in household dummy	−0.0516***	−2.841***	−2.961***	−0.0491***	−0.0534***
	(0.00571)	(0.253)	(0.259)	(0.00560)	(0.00584)
Children 7–15 in household dummy	−0.0425***	−2.318***	−2.333***	−0.0293***	−0.0292***
	(0.00519)	(0.230)	(0.233)	(0.00518)	(0.00533)
Constant	−0.841***	−41.45***	−36.29***	2.974***	3.131***
	(0.0589)	(2.615)	(3.089)	(0.0617)	(0.0680)
Observations	54164	53011	52348	40239	39789
Number of individuals	10395	10357	10322	8735	8700
R-squared	0.024	0.049		0.126
Hausman test⁺			0.000		0.000

Standard errors in parentheses, *significant at 10%; **significant at 5%; ***significant at 1%. ⁺Reports p-value of the Hausman test of endogeneity. In IV regression (log) hourly wage is instrumented using two dummies for education, interactions between education dummies and quartic in age and country-year dummies. All regressions include individual fixed-effects.