Taxing Overtime or Subsidizing Employment
This paper compares the macroeconomic implications of overtime taxation and wage and employment subsidies in a dynamic general equilibrium model in which hours and bodies are imperfect substitutes due to team work and externality-based commuting costs. To obtain reliable estimates, I calibrate the model to the substitutability between the workweek and employment using business cycle information. I find that subsidizing employment can achieve the same employment increase as taxing overtime but at a lower cost in terms of output, productivity, wages and welfare. The wage subsidy that achieves the same employment increase turns out to be very costly from a fiscal point of view
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Volume (Year): 9 (2009)
Issue (Month): 1 (October)
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- repec:hal:journl:halshs-00270295 is not listed on IDEAS
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Elsevier, vol. 92(3-4), pages 817-843, April.
- Arnaud Chéron & Jean-Olivier Hairault & François Langot, 2008. "A Quantitative Evaluation of Payroll Tax Subsidies For Low-Wage Workers: An Equilibrium Search Approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270295, HAL.
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"A Law of Large Numbers for Large Economies,"
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- Victoria Osuna Padilla & José-Víctor Ríos-Rull, 2002.
"Implementing the 35 Hour Workweek by Means of Overtime Taxation,"
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- Victoria Osuna & Jose-Victor Rios-Rull, 2003. "Implementing the 35 Hour Workweek by Means of Overtime Taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 179-206, January.
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