Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform
No 27726, NBER Working Papers from National Bureau of Economic Research, Inc
Moonlighting is increasingly popular in OECD countries, with 5 to 10% 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 66pp. 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 is the key determinant of moonlighting.
JEL-codes: H2 J01 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-iue, nep-lab, nep-pbe and nep-pub
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