Overtime work, dual job holding and taxation

Traditionally, labour supply data do not include much information on hours and wages in secondary <p> job or overtime work. In this paper, we estimate labour supply models based on survey information on hours and <p> wages in overtime work and second job which is merged to detailed register information on income taxes, <p> deductions, taxable income etc. We also allow for the effect of observed fixed costs in main occupation and <p> unobserved fixed costs in second job, and a ‘stigmatization effect’ from unemployment. The estimated models <p> follow a ‘Hausman-approach’. The results indicate that the labour supply elasticities are highly sensitive to the <p> inclusion of information on overtime work and secondary job and to the handling of fixed costs of work. The <p> estimated elasticities are numerically larger when explicit information on overtime and second job work is taken <p> into account compared to traditional labour supply models without explicit information on overtime pay and second <p> job wages. However, when the model allows for stigmatization effects and unobserved fixed costs of work in second <p> job, the resulting elasticities reduce considerably.