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

Table 6 Effects of small/medium/large 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
Small windfall gains dummy	−0.00283	−0.132	−0.114	0.00671	0.00599
	(0.00458)	(0.203)	(0.204)	(0.00464)	(0.00476)
Medium windfall gains dummy	−0.00597	−0.0102	0.0740	−0.00356	−0.00143
	(0.00494)	(0.218)	(0.221)	(0.00502)	(0.00517)
Large windfall gains dummy	−0.0213**	−0.568	−0.406	−0.0137	−0.00931
	(0.00835)	(0.371)	(0.378)	(0.00851)	(0.00882)
Hourly wage		−0.830***	−0.427**
		(0.0262)	(0.204)
Log hourly wage				−0.404***	−0.200***
				(0.00610)	(0.0471)
Age	0.0824***	3.885***	3.630***	0.0565***	0.0388***
	(0.00272)	(0.121)	(0.150)	(0.00295)	(0.00464)
Age^2	−0.000985***	−0.0452***	−0.0439***	−0.000488***	−0.000391***
	(3.09e-05)	(0.00137)	(0.00142)	(3.40e-05)	(3.88e-05)
Married dummy	0.0131*	1.213***	1.159***	0.0148**	0.00942
	(0.00680)	(0.301)	(0.312)	(0.00671)	(0.00708)
Children 0–6 in household dummy	−0.0518***	−2.848***	−2.970***	−0.0491***	−0.0534***
	(0.00571)	(0.253)	(0.259)	(0.00560)	(0.00584)
Children 7–15 in household dummy	−0.0427***	−2.323***	−2.338***	−0.0294***	−0.0293***
	(0.00519)	(0.230)	(0.233)	(0.00518)	(0.00533)
Constant	−0.848***	−41.78***	−36.56***	2.971***	3.126***
	(0.0587)	(2.609)	(3.085)	(0.0616)	(0.0679)
Observations	54164	53011	52348	40239	39789
Number of individuals	10395	10357	10322	8735	8700
R-squared	0.024	0.049		0.127
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.