Comparative Advantage and Moonlighting
46 Pages Posted: 24 May 2019 Last revised: 25 May 2019
Date Written: 2019-05-24
The proportion of multiple jobholders (moonlighters) is negatively correlated with productivity (wages) in cross-sectional and time series data, but positively correlated with education. We develop a model of the labor market to understand these seemingly contradictory facts. An income eï¬€ect explains the negative correlation with productivity while a comparative advantage of skilled workers explains the positive correlation with education. We provide empirical evidence of the comparative advantage in CPS data. We calibrate the model to 1994 data on multiple jobholdings, and assess its ability to reproduce the 2017 data. There are three exogenous driving forces: productivity, number of children and the proportion of skilled workers. The model accounts for 68.7% of the moonlithing trend for college-educated workers, and overpredicts it by 33.7 percent for high school-educated workers. Counterfactual experiments reveal the contribution of each exogenous variable.
Keywords: Macroeconomics, labor supply, multiple jobholders, productivity, full-time job, part-time job, comparative advantage, income eï¬€ect
JEL Classification: E1, J2, J22, J24, O4
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