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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harald Uhlig, 2010.
"A Law of Large Numbers for Large Economies,"
Levine's Working Paper Archive
2070, David K. Levine.
- repec:hal:journl:halshs-00270295 is not listed on IDEAS
- Chéron, Arnaud & Hairault, Jean-Olivier & Langot, François, 2008.
"A quantitative evaluation of payroll tax subsidies for low-wage workers: An equilibrium search approach,"
Journal of Public Economics,
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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