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The Detaxation of Overtime Hours: Lessons from the French Experiment

Listed author(s):
  • Pierre Cahuc
  • Stéphane Carcillo

In October 2007, France introduced an exemption on the income tax and social security contributions that applied to wages received for hours worked overtime. The goal of the policy was to increase the number of hours worked. This article shows that this reform has had no significant impact on hours worked. Conversely, it has had a positive impact on the overtime hours declared by highly qualified wage earners, who have opportunities to manipulate the overtime hours they declare in order to optimize their tax situation since the hours they work are difficult to verify.

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File URL: http://dx.doi.org/10.1086/674987
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File URL: http://dx.doi.org/10.1086/674987
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 32 (2014)
Issue (Month): 2 ()
Pages: 361-400

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Handle: RePEc:ucp:jlabec:doi:10.1086/674987
Contact details of provider: Web page: http://www.journals.uchicago.edu/JOLE/

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  1. Matthieu Chemin & Etienne Wasmer, 2009. "Using Alsace-Moselle Local Laws to Build a Difference-in-Differences Estimation Strategy of the Employment Effects of the 35-Hour Workweek Regulation in France," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 487-524, October.
  2. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
  3. Stephen J. Trejo, 2003. "Does the Statutory Overtime Premium Discourage Long Workweeks?," ILR Review, Cornell University, ILR School, vol. 56(3), pages 530-551, April.
  4. Sandmo, Agnar, 1981. "Income tax evasion, labour supply, and the equity--efficiency tradeoff," Journal of Public Economics, Elsevier, vol. 16(3), pages 265-288, December.
  5. Bauer, Thomas & Zimmermann, Klaus F, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-436, September.
  6. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2016. "Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries," Economica, London School of Economics and Political Science, vol. 83(330), pages 219-246, 04.
  7. Dora L. Costa, 2000. "Hours of Work and the Fair Labor Standards Act: A Study of Retail and Wholesale Trade, 1938–1950," ILR Review, Cornell University, ILR School, vol. 53(4), pages 648-664, July.
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