# If an employee works overtime (and gets paid for it), how does this affect a nation's GDP?

GDP = Consumption + Government Expenditure + Investment + Exports - Imports

My cases are:

(1) If the employee is getting paid for his extra-work, his consumption would increase.

(2) This employee might take away the job of someone else --and thus his increase in spending could get nullified

By definition, GDP = the total value of all goods and services produced.

(1) If even after working overtime, the company produces the same amount of goods / service --by definition, GDP hasn't risen at all.

• Indeed, this is a classic example to showcase the difference between a change in the distribution of income, and a change in income. – Alecos Papadopoulos Jun 1 '16 at 21:35

You are correct: an increase in the wage does not by itself imply an increase in GDP. So, if you pay a worker \$20 for an hour of overtime which you could have bought from another worker for \$10, but they both produce the same thing, GDP does not change by switching from one arrangement to the other.