The life cycle model of labour supply suggests that people who have experienced a large, unanticipated shock to their non-human wealth should work less than similar people who did not. For instance, a person who just won the lottery should work less in the future than someone else who did not. However, a recent paper by Furaker and Hedenus (2012) (pdf on Blackboard) found quite ambiguous results for the effect of winning the lottery on work behavior among Swedes. Can their findings be reconciled with the life cycle labour-leisure model we studied? If not, how would we have to modify the model to explain their findings?

 
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