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Overtime work, dual job holding and taxation

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Author Info

  • Frederiksen, Anders

    ()
    (Department of Economics, Aarhus School of Business)

  • Graversen, Ebbe Krogh

    (The Danish Institute for Studies in Research and Research Policy (Analyseinstitut for Forskning))

  • Smith, Nina

    ()
    (Department of Economics, Aarhus School of Business)

Abstract

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 considerably.

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File URL: http://www.hha.dk/nat/WPER/01-7_nin.pdf
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Bibliographic Info

Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 01-7.

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Length: 38 pages
Date of creation: 01 May 2001
Date of revision:
Handle: RePEc:hhs:aareco:2001_007

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Related research

Keywords: Labour supply; Dual job holding; Overtime work; Piecewise linear budget constraints;

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Cited by:
  1. Mohammad Hussain, 2009. "The sensitivity of income polarization," Journal of Economic Inequality, Springer, vol. 7(3), pages 207-223, September.
  2. Robinson, Helen & Wadsworth, Jonathan, 2006. "The Impact of the Minimum Wage on the Incidence of Second Job Holding in Britain," Cardiff Economics Working Papers E2006/14, Cardiff University, Cardiff Business School, Economics Section.
  3. Giannelli, Gianna Claudia & Braschi, Cristina, 2002. "Reducing Hours of Work: Does Overtime Act as a Brake Upon Employment Growth? An Analysis by Gender for the Case of Italy," IZA Discussion Papers 557, Institute for the Study of Labor (IZA).
  4. RENNA Francesco & OAXACA Ronald L. & CHOE Chung, 2013. "Constrained vs Unconstrained Labor Supply: The Economics of Dual Job Holding," CEPS/INSTEAD Working Paper Series 2013-03, CEPS/INSTEAD.
  5. Rasmus Lentz, 2003. "Optimal Unemployment Insurance in an Estimated Job Search Model with Savings," CAM Working Papers 2004-10, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  6. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-State Labor Supply Elasticities: A Survey," IZA Discussion Papers 7698, Institute for the Study of Labor (IZA).
  7. Peter Birch Sørensen & Martin Ino Hansen & A. Lans Bovenberg, 2006. "Savings Accounts and the Life-Cycle Approach to Social Insurance," EPRU Working Paper Series 06-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.

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