Report

2015-05-28

Southern Africa Labour and Development Research Unit

University of Cape Town

Traditional labour economics predicts that the supply of labour will increase as earnings increase. However, labour supply need not be positive, especially if workers make decisions based on short-term income targets. Income targeting may best describe jobs where workers decide on working hours and where wages are uncorrelated across days. This paper examines the labour supply of sex workers in Cape Town, whose working conditions largely fulfill these criteria. Contrary to traditional economic theory, we find evidence of a negative labour supply curve.