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Overtime work, dual job holding, and taxation

In: Work, Earnings and Other Aspects of the Employment Relation

Author

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  • Anders Frederiksen
  • Ebbe Krogh Graversen
  • Nina Smith

Abstract

Labor supply data seldom include detailed information on hours and wages in secondary job or overtime work. Based on survey information on hours and wages in overtime work and second job which is merged to administrative register information on income taxes and deductions we estimate a “Hausman labor supply model,” which allows for a detailed treatment of nonconvexities. Including explicit information on overtime pay and second job wages increase the estimated elasticities compared to a standard labor supply model without this information. However, allowing a more flexible treatment of nonconvexities the estimated elasticities are reduced; even below the estimates of the baseline results. In simulations we show that these findings have significant consequences when evaluating the degree of self-financing of various tax reforms.

Suggested Citation

  • Anders Frederiksen & Ebbe Krogh Graversen & Nina Smith, 2008. "Overtime work, dual job holding, and taxation," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 25-55, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-9121(08)28002-7
    DOI: 10.1016/S0147-9121(08)28002-7
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    Citations

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    Cited by:

    1. Olivier Bargain & Andreas Peichl, 2016. "Own-wage labor supply elasticities: variation across time and estimation methods," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-31, December.
    2. 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.
    3. Panos Pashardes & Alexandros Polycarpou, 2015. "A backward-bending and forward-falling semi-log model of labour supply," University of Cyprus Working Papers in Economics 03-2015, University of Cyprus Department of Economics.
    4. Mohammad Hussain, 2009. "The sensitivity of income polarization," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(3), pages 207-223, September.
    5. Helen Robinson & Jonathan Wadsworth, 2007. "Impact Of The Minimum Wage On The Incidence Of Second Job Holding In Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 553-574, September.
    6. Bargain, Olivier & Peichl, Andreas, 2013. "Steady-state labor supply elasticities: A survey," ZEW Discussion Papers 13-084, ZEW - Leibniz Centre for European Economic Research.
    7. Frederiksen, Anders & Graversen, Ebbe Krogh & Smith, Nina, 2005. "Tax evasion and work in the underground sector," Labour Economics, Elsevier, vol. 12(5), pages 613-628, October.
    8. 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 of Labor Economics (IZA).
    9. Gregory Gilpin, 2020. "Policy‐Induced School Calendar Changes and Teacher Moonlighting," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 989-1018, January.
    10. Chung Choe & Ronald L. Oaxaca & Francesco Renna, 2018. "Constrained vs unconstrained labor supply: the economics of dual job holding," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(4), pages 1279-1319, October.
    11. Gregory Gilpin, 2018. "Policy-induced School Calendar Changes and Teacher Moonlighting," CAEPR Working Papers 2018-009, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    12. 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.
    13. Hans Schytte Sigaard, 2022. "Labor Supply Responsiveness to Tax Reforms," Economics Working Papers 2022-04, Department of Economics and Business Economics, Aarhus University.

    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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