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The Detaxation of Overtime Hours: Lessons from the French Experiment

Author

Listed:
  • Cahuc, Pierre

    (Sciences Po, Paris)

  • Carcillo, Stéphane

    (OECD)

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

  • Cahuc, Pierre & Carcillo, Stéphane, 2011. "The Detaxation of Overtime Hours: Lessons from the French Experiment," IZA Discussion Papers 5439, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5439
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    References listed on IDEAS

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    1. Thomas Bauer & Klaus F. Zimmermann, 1999. "Overtime Work and Overtime Compensation in Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 419-436, September.
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    7. 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.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Another French experiment with work hours going bad
      by Economic Logician in Economic Logic on 2011-03-07 21:13:00

    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. repec:spo:wpmain:info:hdl:2441/1fruveeiq88ihrgdns5aoi4glg is not listed on IDEAS
    4. Philippe Askenazy, 2013. "Working time regulation in France from 1996 to 2012," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(2), pages 323-347.
    5. Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    6. François Hermet & Michel Paul, 2017. "Les dysfonctionnements du marché du travail à Mayotte. Volet n°2 : Quelles implications pour les politiques de l’emploi ?," Post-Print hal-03546551, HAL.
    7. Erwin Ooghe, 2020. "Conditional Earnings Subsidies for Low Earners," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 524-552, April.
    8. 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.
    9. Argilés-Bosch, Josep Mª & Ravenda, Diego & Garcia-Blandón, Josep, 2021. "E-commerce and labour tax avoidance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 81(C).
    10. repec:hal:spmain:info:hdl:2441/1fruveeiq88ihrgdns5aoi4glg is not listed on IDEAS
    11. Ísis F. Lira & Laura de Carvalho Schiavon & Ricardo da Silva Freguglia, 2024. "Electronic monitoring of working time and labour market outcomes: Evidence from Brazil," Industrial Relations Journal, Wiley Blackwell, vol. 55(3), pages 205-221, May.
    12. 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.
    13. Pauline Carry, 2022. "The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market," Working Papers hal-04067393, HAL.
    14. 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.
    15. 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.
    16. 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).
    17. François Hermet & Michel Paul, 2016. "Les dysfonctionnements du marché du travail à Mayotte. Volet n°1 : Etat des lieux," Post-Print hal-03546550, HAL.
    18. Can, Ege & Fossen, Frank M., 2023. "Income Taxation and Hours Worked in Different Types of Entrepreneurship," IZA Discussion Papers 16683, Institute of Labor Economics (IZA).
    19. Boza, István & Reizer, Balázs, 2024. "The Role of Flexible Wage Components in Gender Wage Difference," IZA Discussion Papers 17125, Institute of Labor Economics (IZA).
    20. Olivier Godechot, 2009. "L'Alsace-Moselle peut-elle décider des 35 heures ?," Post-Print hal-01391560, HAL.
    21. Vincent Charlet & Philippe Frocrain, 2017. "Les limites des allégements de charges sur les bas salaires," Working Papers hal-01695167, HAL.
    22. Kawaguchi, Daiji & Naito, Hisahiro & Yokoyama, Izumi, 2017. "Assessing the effects of reducing standard hours: Regression discontinuity evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 43(C), pages 59-76.
    23. 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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    More about this item

    Keywords

    tax exemption; overtime hours; working time;
    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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