Overtime work, dual job holding, and taxation

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor markets, (2) internationalization of labor markets and European integration, (3) the welfare state and labor markets, (4) labor markets in transition, (5) the future of work, (6) project evaluation and (7) general labor economics. Terms of use: Documents in Overtime Work Dual Job Holding and Taxation Anders Frederiksen Ebbe Krogh Graversen Nina Smith D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. Traditionally, labour supply data do not include much information on hours and wages in secondary job or overtime work. In this paper, we estimate labour supply models based on survey information on hours and wages in overtime work and second job which is merged to detailed register information on income taxes, deductions, taxable income etc. We also allow for the effect of observed fixed costs in main occupation and unobserved fixed costs in second job, and a 'stigmatization effect' from unemployment. The estimated models follow a 'Hausman-approach'. The results indicate that the labour supply elasticities are highly sensitive to the inclusion of information on overtime work and secondary job and to the handling of fixed costs of work. The estimated elasticities are numerically larger when explicit information on overtime and second job work is taken into account compared to traditional labour supply models without explicit information on overtime pay and second job wages. However, when the model allows for stigmatization effects and unobserved fixed costs of work in second job, the resulting elasticities reduce considerabl...

Tax evasion and work in the underground sector

“…The effect of both reforms increases with educational level. This is in accordance with the results found in Frederiksen et al (2001) who analyse the supply effects of Danish income tax reforms in an alternative econometric setup (a dHausman type modelT) which does not include the potential interactions effects between taxed and untaxed labour supply. Columns 5 and 7 in Table 7 indicate that the increased labour supply in the regular sector is not mainly caused by a shift from dundergroundT to dregularT sector work.…”

“…If no risk premium, everybody would (theoretically) work in the underground sector at a higher wage rate, at least until the wage rates are equalised through lower marginal tax rates on lower tax segment in the regular sector. 14 The construction of budget constraint for the data set used in this study is discussed in more details in Frederiksen et al (2001).…”

“…In general, the supply effects in the underground sector of both reforms are small. A reduction of the dbasic tax rateT has a numerically smaller effect on the underground labour 16 A detailed description of the Danish income tax system in 1996 is given in Frederiksen et al (2001). Sample proportion, % 9 2 1 2 5 4 5 1 0 0 supply than a reduction in the dtop tax rateT.…”

Policy‐Induced School Calendar Changes and Teacher Moonlighting

“…While this research is consistent in concluding that the hours constraint is a significant factor in dual job holding decisions, recent studies using more granular data identify several nuances. For example, Frederiksen, Graversen, and Smith (2008) examine the propensity to engage in SE across the income spectrum and find an inverse relationship between the probability of holding secondary employment and workers' current primary earnings.…”

Constrained vs unconstrained labor supply: the economics of dual job holding

“…Shishko and Rostker (1976) and Frederiksen et al (2008) found that labor supply becomes more elastic to changes in the wage rate after accounting for the decision to moonlight. Paxson and Sicherman (1998) concluded that moonlighting is a short-run solution to a situation of under-employment, while searching for a job that offers the target hours of work.…”