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Overtime Work, Dual Job Holding and Taxation

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Author Info

  • Frederiksen, Anders

    ()
    (Aarhus University)

  • Graversen, Ebbe K.

    ()
    (AFSK - Danish Institute for Studies in Research and Research Policy)

  • Smith, Nina

    ()
    (Aarhus University)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 323.

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Length: 46 pages
Date of creation: Jul 2001
Date of revision:
Publication status: published in: Research in Labor Economics, 2008, 28, 25-55
Handle: RePEc:iza:izadps:dp323

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Related research

Keywords: overtime work; piecewise linear budget constraints; Labour supply; dual job holding;

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Cited by:
  1. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-state labor supply elasticities: A survey," ZEW Discussion Papers 13-084, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. 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.
  3. 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.
  4. Robinson, Helen & Wadsworth, Jonathan, 2006. "The Impact of the Minimum Wage on the Incidence of Second Job Holding in Britain," IZA Discussion Papers 2445, Institute for the Study of Labor (IZA).
  5. Rasmus Lentz, 2009. "Optimal Unemployment Insurance in an Estimated Job Search Model with Savings," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 37-57, January.
  6. Mohammad Hussain, 2009. "The sensitivity of income polarization," Journal of Economic Inequality, Springer, vol. 7(3), pages 207-223, September.
  7. 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).

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