Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform

Tazhitdinova, Alisa

Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform

American Economic Journal: Economic Policy, 2022, vol. 14, issue 1, 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.

JEL-codes: H24 H31 J22 J31 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform (2020)
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DOI: 10.1257/pol.20190786

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