Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform

Moonlighting is increasingly popular in OECD countries, with 5 to 10 percent of workers holding two or more jobs. However, little known about the responsiveness moonlighting financial incentives due lack identifying variation. This paper studies a unique reform Germany that allowed hold small secondary jobs tax-free, decreasing marginal tax rate by between 19.5 66 pp. I show resulted dramatic increase was not offset reductions primary earnings and hours constraints are key determinant moonlighting. (JEL H24, H31, J22, J31)