# Tax Exemption of Overtime Income and the Motivation to Work: A Lesson from France
**Date de l'événement :** 02/08/2025
* Publié le 02/08/2025

### Image(s)
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## Auteur(s)
Guillaume Pousse

## Direction
Pierre Cahuc

## Description
**Ce mémoire est issu de la sélection des meilleurs mémoires du master d’économie de l'année 2024-2025 :  
  
Abstract**  
  
This study evaluates the impact of the 2007 TEPA Law – which exempted overtime compensation from income tax and social security contributions – on individuals’ desired hours of work and work hours mismatch. The work hours mismatch is a largely understudied indicator in the context of France, and is defined as the difference between desired hours and actual hours of work. Using data from the nationally representative Labor Force Survey, I document four stylized facts on the work hours mismatch in France. First, the mismatch is positive across the majority of the working population, the French are underworked. Second, the positive mismatch is robust to socio demographic heterogeneity. Third, there is a U-shaped relationship between wages and underemployment. Fourth, the mismatch tends to be null in the 45-50 working hour bracket. To estimate the effect of the reform on desired hours and the working hours mismatch, I implement a difference-in-differences strategy. I find that the reform led to a decrease in individuals’ desired working hours, a reduction in the mismatch, and a lower probability of being underworked. These effects are concentrated among men, manufacturing sector workers, and mid-to high-wage earners. The results suggest that the reform may have inadvertently reduced motivation to work more, possibly due to strategic adjustment of hours or compensation channels, as suggested in related literature. Overall, this study raises broader questions about the effectiveness of labor supply-side incentives alone.  
  
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**Accéder au mémoire en ligne :** [https://www.sciencespo.fr/ecole-recherche/sites/sciencespo.fr.ecole-recherche/files/POUSSE-Guillaume.pdf](https://www.sciencespo.fr/ecole-recherche/sites/sciencespo.fr.ecole-recherche/files/POUSSE-Guillaume.pdf)

### Type(s) de ressource
`#Texte` 

### Discipline
`#Économie` 

### Thématique(s)
`#Travail / relations professionnelles / emploi` `#Économies` 

### Langue(s)
`#Anglais` 

### Famille(s) de contenu
`#Recherche` `#Production étudiante` 

### Type(s) d'accès
`#Accès libre` 

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