A behavioral model of labor supply: Casting some light into the black box of income-leisure choice

The economics of labor supply, a basic building block of economic theory, cannot provide any substantive analytical predictions on the course of labor supply by an individual or a group. This is largely due to the absence, in the theory of income-leisure choice, of any consequential behavioral content which speaks to existing and changing preferences of individuals and to the differences in preferences across individuals. Introducing a discussion of preferences into the argument, in particular target real income and target nonmarket time, provides for a richer model of labor supply and for a more precise set analytical predictions with important public policy implications.