Impact of Moonlighting on the Earning Differentials in Sri Lanka

Holding more than one job is called moonlighting. This creates both positive and negative impacts on individual workers as well as on the economy. This paper limits itself only to the impacts on the individual worker. This study examines the impacts of moonlighting on workers’ per-hour total earnings and wage differentials. The Sri Lanka Labour Force Survey conducted by the Department of Census and Statistics of Sri Lanka in 2017 has been used for the study. The study uses 28,671 employed persons, and 2,351 are holding secondary employment. The Endogenous switching regression model has been used for the analysis. The Endogenous switching regression allows the comparison of the factors associated with total log-hourly earnings between moonlighters and non-moonlighters with and without moonlighting. Moonlighters are generally a disadvantaged group when compared with non-moonlighters. However, moonlighting facilitates the reduction of the wage gap between moonlighters and non-moonlighters. Moonlighting by moonlighters and moonlighting by non-moonlighters are economically optimal solutions for both groups. Therefore, it is evident that moonlighting has increased economic welfare. Further, it reduces wage disparities among workers in terms of ethnic groups and gender and thus leading to increased gender and ethnic welfare, while it causes to expand earning disparities by residential sectors leading to reduce their economic welfare. Creating formal opportunities for moonlighting, encouraging moonlighting among females, minor ethnic groups etc. Through micro-financing programmes would be important policy options for empowering vulnerable groups in the labour market of Sri Lanka, according to the findings of this study.