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Taxes and Technological Determinants of Wage Inequalities: France 1976-2010

Author

Listed:
  • Antoine Bozio

    (Paris School of Economics)

  • Thomas Breda

    (Paris School of Economics)

  • Malka Guillot

    (CREST)

Abstract

This paper makes two simple points. First, labour demand depends on product wage or labour cost. Hence, demand-side explanations for the rise in inequalities such as skill-biased technical change and job polarization should be tested using data on labour cost and not net wage or posted wage. Contrary to previous studies, we find evidence of skill-biased technical change in France when we measure wage inequality in terms of labour cost. In that respect, France is no exception. Second, the French case provides a clear evidence that changes in taxation can have very significant effect in converting market inequalities into consumption or net wages inequalities. In France, net wage inequalities have decreased by about 10%, while labour cost inequalities have increased by 15% over the 1976-2010 period. This fact provides support both for the supporters of the skill-biased technical change explanations of the secular increase in wage inequalities, as well to those who believe that institutions could have significant impact on inequalities in disposable incomes.

Suggested Citation

  • Antoine Bozio & Thomas Breda & Malka Guillot, 2016. "Taxes and Technological Determinants of Wage Inequalities: France 1976-2010," Working Papers 2016-07, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2016-07
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    References listed on IDEAS

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    Cited by:

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    2. Elvire Guillaud & Matthew Olckers & Michaël Zemmour, 2020. "Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 444-466, June.
    3. James Harrigan & Ariell Reshef & Farid Toubal, 2016. "The March of the Techies: Technology, Trade, and Job Polarization in France, 1994-2007," Working Papers 2016-15, CEPII research center.
    4. Luca Bittarello & Francis Kramarz & Alexis Maitre, 2024. "The Task Content of Occupations," Revue économique, Presses de Sciences-Po, vol. 75(1), pages 31-53.
    5. Pora, Pierre & Wilner, Lionel, 2020. "A decomposition of labor earnings growth: Recovering Gaussianity?," Labour Economics, Elsevier, vol. 63(C).
    6. Elvire Guillaud & Matthew Olckers & Michaël Zemmour, 2017. "Four levers of redistribution: The impact of tax and transfer systems on inequality reduction," SciencePo Working papers Main hal-02735326, HAL.
    7. Sébastien Bock, 2018. "Job Polarization and Unskilled Employment Losses in France," PSE Working Papers halshs-01513037, HAL.
    8. Breda, Thomas & Haywood, Luke & Wang, Haomin, 2022. "Equilibrium Effects of Payroll Tax Reductions and Optimal Policy Design," IZA Discussion Papers 15810, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    wage inequality; labour cost; Social Security contributions; tax incidence;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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