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The Contribution of Payroll Taxation to Wage Inequality in France

Antoine Bozio (), Thomas Breda () and Malka Guillot ()
Additional contact information
Malka Guillot: ETH Zurich

No 13317, IZA Discussion Papers from Institute of Labor Economics (IZA)

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; Social Security contributions; tax incidence (search for similar items in EconPapers)
JEL-codes: I24 J24 J31 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020-05
New Economics Papers: this item is included in nep-lma
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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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