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The Contribution of Payroll Taxation to Wage Inequality in France

Malka Guillot, Antoine Bozio () and Thomas Breda ()
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Malka Guillot: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, ETH Zurich, Universitatstrasse 16, 8092 Zurich, Switzerland

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Abstract: Over the 1967-2015 period, net wage inequality has decreased in France by 25%, in contrast to the significant increase experienced by most developed countries. Less well known is the fact that labor cost inequality has actually increased by 8% over the same period. We show that, (a) standard demand-side explanations for the rise in inequality apply in France when tested using measures of labor cost (as they should be); (b) reforms to payroll taxation, jointly with increases in the minimum wage, can explain a large part of the decrease in net wage inequality, in the context of increasing market inequality.

Keywords: wage inequality; labor cost; payroll tax; tax incidence (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-his and nep-pbe
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Working Paper: The Contribution of Payroll Taxation to Wage Inequality in France (2020) Downloads
Working Paper: The Contribution of Payroll Taxation to Wage Inequality in France (2020) Downloads
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