Working Paper: CEPR ID: DP8217
Authors: Pierre Cahuc; Stéphane Carcillo
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 Codes: H24; H25; J22; J30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Detaxation of overtime hours (J33) | Total hours worked by employees (J22) |
| Detaxation of overtime hours (J33) | Paid overtime hours declared (J33) |
| Paid overtime hours declared (J33) | Actual hours worked (J22) |
| Detaxation of overtime hours (J33) | Income reallocation (E25) |