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The Detaxation of Overtime Hours: Lessons from the French Experiment

Author

Listed:
  • 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
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    Cited by:

    1. Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2009. "The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 99(5), pages 2209-2226, December.
    2. Marie-Louise Leroux & Gregory Ponthiere, 2018. "Working time regulation, unequal lifetimes and fairness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(3), pages 437-464, October.
    3. Pauline Carry, 2022. "The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market," SciencePo Working papers Main hal-04067393, HAL.
    4. Alisa Tazhitdinova, 2022. "Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 14(1), pages 473-500, February.
    5. Ronald L. Oaxaca & Galiya Sagyndykova, 2020. "The effect of overtime regulations on employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-89, December.
    6. repec:spo:wpmain:info:hdl:2441/1fruveeiq88ihrgdns5aoi4glg is not listed on IDEAS
    7. Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    8. Martins, Pedro S., 2016. "Can Overtime Premium Flexibility Promote Employment? Firm- and Worker-Level Evidence from a Labour Law Reform," IZA Discussion Papers 10205, Institute of Labor Economics (IZA).
    9. Erwin Ooghe, 2020. "Conditional Earnings Subsidies for Low Earners," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 524-552, April.
    10. Daniel Weimar & Katrin Scharfenkamp, 2019. "Effort reduction of employer‐to‐employer changers: Empirical evidence from football," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(3), pages 277-291, April.
    11. Argilés-Bosch, Josep Mª & Ravenda, Diego & Garcia-Blandón, Josep, 2021. "E-commerce and labour tax avoidance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 81(C).
    12. Olivier Godechot, 2009. "L'Alsace-Moselle peut-elle décider des 35 heures ?," Post-Print hal-01391560, HAL.
    13. repec:hal:spmain:info:hdl:2441/1fruveeiq88ihrgdns5aoi4glg is not listed on IDEAS
    14. Nicolas Roys, 2016. "Persistence of Shocks and the Reallocation of Labor," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 22, pages 109-130, October.
    15. Pauline Carry, 2022. "The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market," Working Papers hal-04067393, HAL.
    16. Martins, Pedro S., 2017. "Economic effects of overtime premium flexibility: Firm- and worker-level evidence from a law reform," GLO Discussion Paper Series 102, Global Labor Organization (GLO).

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