76

This article proposes a general equilibrium model to quantify the effects of labour tax cuts. We distinguish between skilled labour, for which supply follows a Blanchflower-Oswald wage curve, and unskilled labour, for which supply is very elastic around the minimum wage. We calibrate the model for France and use it to estimate the effects of two recent tax reforms on output and employment: the tax credit for employment and competitiveness (CIEC) and the Responsibility and Solidarity Pact. If not offset by other tax measures, and disregarding Keynesian demand-side effects, we estimate that these reforms contribute to creating around 195,000 jobs in the short run (340,000 to 870,000 jobs in the long run).