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The Detaxation of Overtime Hours: Lessons from the French Experiment

Author

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  • Pierre Cahuc

    (X - École polytechnique - IP Paris - Institut Polytechnique de Paris, ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique, CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz])

  • Stéphane Carcillo

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

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.

Suggested Citation

  • Pierre Cahuc & Stéphane Carcillo, 2014. "The Detaxation of Overtime Hours: Lessons from the French Experiment," Post-Print hal-03460334, HAL.
    • Handle: RePEc:hal:journl:hal-03460334
    DOI: 10.1086/674987
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03460334
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    References listed on IDEAS

    as
    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," SciencePo Working papers hal-03461753, HAL.
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    More about this item

    Keywords

    Overtime; Research; Working hours; Income tax; Labor productivity;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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