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

Table 3 Effects of windfall gains on working hours – men

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	−0.00493	−0.158	−0.0525	0.00126	0.00130
	(0.00443)	(0.237)	(0.239)	(0.00398)	(0.00408)
Hourly wage		−0.879***	−0.812***
		(0.0360)	(0.218)
Log hourly wage				−0.368***	−0.192***
				(0.00704)	(0.0462)
Age	0.0955***	5.188***	5.064***	0.0621***	0.0471***
	(0.00338)	(0.181)	(0.205)	(0.00323)	(0.00490)
Age^2	−0.00115***	−0.0602***	−0.0593***	−0.000580***	−0.000495***
	(3.83e-05)	(0.00205)	(0.00208)	(3.69e-05)	(4.23e-05)
Married dummy	0.0197**	2.126***	2.050***	0.0349***	0.0293***
	(0.00843)	(0.449)	(0.460)	(0.00748)	(0.00785)
Children 0–6 in household dummy	−0.0309***	−1.207***	−1.406***	3.02e-05	−0.00319
	(0.00684)	(0.366)	(0.372)	(0.00602)	(0.00625)
Children 7–15 in household dummy	−0.0356***	−1.497***	−1.579***	−0.00605	−0.00580
	(0.00640)	(0.341)	(0.346)	(0.00566)	(0.00582)
Constant	−0.980***	−59.98***	−56.94***	2.959***	3.076***
	(0.0733)	(3.925)	(4.335)	(0.0679)	(0.0738)
Observations	26176	25626	25327	22503	22278
Number of individuals	5087	5073	5061	4691	4679
R-squared	0.044	0.070		0.140
Hausman test⁺			0.000		0.008

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.