Increasing hours worked moonlighting responses to a large tax reform by Alisa Tazhitdinova
By: Tazhitdinova, Alisa
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Material type: 
ArticlePublisher: 2022Subject(s): PLURIEMPLEO | IMPUESTOS | ALEMANIA
In:
American Economic Journal : Economic Policy v. 14, n. 1, February 2022, p. 473-500Summary: 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.
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Resumen.
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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.
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