Overtime Work, Dual Job Holding and Taxation

40 Pages Posted: 30 Jul 2001

See all articles by Anders Frederiksen

Anders Frederiksen

IZA Institute of Labor Economics

Ebbe Krogh Graversen

Aarhus University - Department of Economics; Danish National Institute of Social Research (SFI); Aarhus University - Centre for Research in Social Integration and Marginalization (CIM)

Nina Smith

Aarhus University - Department of Economics; IZA Institute of Labor Economics

Date Written: July 2001

Abstract

Traditionally, labor supply data do not include much information on hours and wages in secondary job or overtime work. In this paper, we estimate labor 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 labor 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 labor 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.

Keywords: Labor Supply, Dual Job Holding, Overtime Work, Piecewise Linear Budget Constraints

JEL Classification: C13, C21, C24, H24, J22

Suggested Citation

Frederiksen, Anders and Graversen, Ebbe Krogh and Smith, Nina, Overtime Work, Dual Job Holding and Taxation (July 2001). IZA Discussion Paper No. 323. Available at SSRN: https://ssrn.com/abstract=276512

Anders Frederiksen

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Ebbe Krogh Graversen

Aarhus University - Department of Economics ( email )

University Park
DK-8000 Aarhus C
Denmark
+45 8942 2360 (Phone)

Danish National Institute of Social Research (SFI)

Herluf Trolles Gade 11
DK-1052 Kopenhagen
Denmark

Aarhus University - Centre for Research in Social Integration and Marginalization (CIM) ( email )

DK-8210 Aarhus V
Denmark

Nina Smith (Contact Author)

Aarhus University - Department of Economics ( email )

Universitetsparken
DK-8000 Aarhus C
Denmark
+45 8948 6413 (Phone)
+45 8615 5175 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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