The Detaxation of Overtime Hours: Lessons from the French Experiment

44 Pages Posted: 31 Jan 2011

See all articles by Pierre Cahuc

Pierre Cahuc

Ecole Polytechnique, Paris

Stephane L. Carcillo

Organization for Economic Co-Operation and Development (OECD)

Date Written: January 2011

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.

Keywords: overtime hours, Tax exemption, working time

JEL Classification: H24, H25, J22, J30

Suggested Citation

Cahuc, Pierre and Carcillo, Stephane L., The Detaxation of Overtime Hours: Lessons from the French Experiment (January 2011). CEPR Discussion Paper No. DP8217, Available at SSRN: https://ssrn.com/abstract=1749858

Pierre Cahuc (Contact Author)

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Stephane L. Carcillo

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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