EconPapers    
Economics at your fingertips  
 

How Do Fiscal and Labor Policies in France Affect Inequality?

Raphael A Espinoza and Esther Perez Ruiz

No 16/41, IMF Working Papers from International Monetary Fund

Abstract: This paper explores the impact of fiscal and labor market policies on efficiency, inequality, and fiscal outcomes in France. We extend the general equilibrium model calibrated for France by Alla and others (2015), with measures of labor and capital income for different groups in the economy (the unemployed, unskilled workers, skilled workers, public servants). For each of these groups we combine data on the income distribution with the outcomes of policy simulations to assess the impact of a suite of stylized policies on output, the fiscal balance, the Gini coefficient, and the shape of the Lorenz curve. We find that most types of fiscal expansions, while adding to the deficit and debt in the near term, generally reduce inequality, the main exception being capital income tax cuts. A reduction of the minimum wage has an ambiguous impact on the income distribution: the Gini coefficient increases, but the lowest income quintile improves its relative position in the income distribution thanks to positive employment effects. The paper also finds scope for “win-win” policy packages that could improve overall efficiency, inequality, and fiscal outcomes, for instance if targeted labor tax reductions are offset by cuts in the public wage bill.

Keywords: Government expenditures and welfare programs; France; Europe; redistribution, market income inequality, labor market policies, fiscal policies, labor, unemployment, minimum wage, workers, income distribution, Personal Income and Wealth Distribution, Factor Income Distribution, Equity, Justice, Inequality, and Other Normative Criteria and Measurement, Government Policy and Regulation, General, Provision and Effects of Welfare Programs, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2016-02-29
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43753 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:16/41

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Series data maintained by Jim Beardow ().

 
Page updated 2018-01-15
Handle: RePEc:imf:imfwpa:16/41