In order to evaluate the impact of the de-taxation, in recent research (Cahuc and Carcillo 2011) we compare the evolution of the paid overtime hours and the hours worked of two groups of individuals, one of which is affected by the reform and the other not. The treatment group is composed of employees who reside and work in France. The untreated group is composed of employees who reside in France but work abroad, in regions adjoining the French border. These transborder workers (travailleurs frontaliers) did not benefit from the de-taxation of overtime hours. Hence, if the reform really did have the effects anticipated, the overtime hours and hours worked of transborder workers ought to have decreased relative to other French employees living in the same region, as long as no other events have modified the relative hours of the two groups of employees. In order to ensure the pertinence of the results obtained, we take into account the differences in economic situation between countries, the evolution of regulatory frameworks on both sides of the borders, as well as the differences between the two groups of employees studied.
Ultimately, we find that the overtime hours of employees working in France rose, relative to those of the transborder employees, starting in the fourth quarter of 2007. This rise in overtime hours applies solely to highly-qualified employees, who have many ways to manipulate the overtime hours they declare in order to achieve tax optimisation, because their work hours are particularly difficult to verify. Conversely, we detect no difference in the evolution of hours worked, whatever category of employee is considered. These results suggest that the upshot of the de-taxation of overtime hours has essentially been tax optimisation, with no real impact on the length of time worked. These results are confirmed by comparing the evolution of the work duration by employees in very small firms and that of independent workers who have not been directly affected by the de-taxation of overtime hours.
Thus, the de-taxation of overtime hours appears not to have fully met its aim. While the wage-earners concerned have indeed benefited from a spike in their remuneration thanks to de-taxation, that has not, on average, come about through working more. De-taxation is costly to the public purse, without any ascertained impact on hours worked.
Wednesday, February 2, 2011
Did the detaxation of overtime, a key Sarkozyan reform intended to implement the campaign slogan "travailler plus pour gagner plus," have the desired effect? Economists Pierre Cahuc and Stéphane Carcillo say no: