Working Paper Series no. 304: Pension entitlements of French and American households: a first comparison. (in French)

Abstract

This paper characterizes the short- and long-run effects of overtime de-taxation. A dynamic general equilibrium with overtime hours is first developed and calibrated to French data. A fiscal shock consisting of a complete de-taxation of overtime hours is then implemented in the model. Several fiscal scenarios are considered, depending on the pace of public debt and depending on whether consumption taxes or lump-sum taxes are adjusted. In each case, the welfare gains of the fiscal reform are computed. Overtime de-taxation is found to have very limited aggregate effects on output and the labor supply. It also generates a small welfare gain or even a welfare loss, depending on the on the fiscal scenario.

Julien Matheron
December 2010

Classification JEL : E13, E62, E65.

Keywords : Overtime de-taxation, general equilibrium