Leisure/Labor Tradeoffs: The Backward-Bending Labor Supply in Fisheries

Abstract

Economists have understood that the open-access nature of fishing grounds can cause the long-run fishery supply to bend backward. There is also increasing speculation that fishermen respond to falling output price either by increasing or decreasing effort, depending on the circumstances. This suggests a short-run backward-bending supply of fishing labor. A dynamic, utility-theoretic model of fishermen's behavior is developed to address this possibility. The model highlights both contemporaneous and intertemporal tradeoffs between labor and leisure. The model is tested and the results indicate that the short-run labor supply in fisheries may exhibit backward-bending properties. In addition, changes in current prices may trigger changes in expectations of future prices, causing potentially greater counterintuitive behavior. These results challenge many traditional regulatory strategies (e.g., output taxes) that address problems of open access.

Source: Gautam, A.B., Strand, I., and J. Kirkley. 1996. “Leisure/labor tradeoffs: the backward-bending labor supply in fisheries.” Journal of Environmental Economics and Management, 31(3): 352-367.

For more information, please contact: Amy.Buss.Gautam@noaa.gov