Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform
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.
Published Versions
Alisa Tazhitdinova, 2022. "Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform," American Economic Journal: Economic Policy, vol 14(1), pages 473-500. citation courtesy of 
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