Daily Labor Supply of Stadium Vendors: An Empirical Analysis of Participation and Effort Decisions

Abstract

This paper analyzes the labor supply behavior of food and beverage vendors at a single major league baseball stadium over an entire season. In contrast to the conven- tional labor supply model, the vendors who I study are paid a pure commission rather than an hourly wage, choose whether to work (participation) and how hard to work (ef- fort) rather than how long to Work (hours), and influence the prevailing “wage” at the stadium through their joint labor supply decisions. I develop a model of vendor labor supply behavior that addresses these unique aspects of a vendor’s labor supply decision and from it derive an empirical framework for estimating the relevant labor supply elasticities. The main result from the empirical analysis is that vendor labor supply elasticities are positive and substantial on both the participation and effort margins; an increase in ez ante expected earnings raises the probability of participation and, con- ditional on aggregate vendor participation, greater attendance appears to elicit higher levels of vendor effort. The estimates also suggest that the elasticity of vendor effort with respect to the commission rate is positive and large. Finally, a brief analysis of the profit maximization problem of the firm that hires the vendors as agents suggests that the estimated labor supply elasticities probably slightly understate the true elasticities.