American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform
American Economic Journal: Economic Policy
vol. 14,
no. 1, February 2022
(pp. 473–500)
Abstract
Moonlighting is increasingly popular in OECD countries, with 5 to 10 percent of workers holding two or more jobs. However, little is known about the responsiveness of moonlighting to financial incentives due to the lack of identifying variation. This paper studies a unique reform in Germany that allowed workers to hold small secondary jobs tax-free, decreasing the marginal tax rate by between 19.5 to 66 pp. I show that the reform resulted in a dramatic increase in moonlighting that was not offset by reductions in primary earnings and that hours constraints are a key determinant of moonlighting.Citation
Tazhitdinova, Alisa. 2022. "Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform." American Economic Journal: Economic Policy, 14 (1): 473–500. DOI: 10.1257/pol.20190786Additional Materials
JEL Classification
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
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