Low-skilled Jobs: The French Strategy
AbstractSince 1995, French governments implemented a specific strategy aiming at lowering unemployment or inactivity of so called unskilled workers, in fact of low wage workers. This strategy used two tools: cuts in employersâ social contributions reduce companiesâ costs for hiring low-wage workers; the Prime Pour lâEmploi, PPE, raises low-wage workersâ incomes, and increases the gap between wage and assistance benefits in order to increase incentives for low-wage workers to take a job. The paper provides a description of the situation of unskilled workers in France. It describes the history of measures lowering employersâ contributions on low wages, presents and discusses the studies that have tried to assess the impact of such measures on employment. These cuts cost approximately 18 billion euros in 2007. An average estimate of about 550,000 jobs created would have an ex post cost of 9 billion euro, i.e. 176,000 euros per created job. The history and the structure of the PPE are presented. According to existing studies, the PPE would not have a significant effect on labour supply. Should it be concluded from it that there is not inactivity trap? Or, on the contrary, that the trap is very deep? The current debate on the appropriateness to maintain employersâ contribution and PPE or to reform them is addressed.
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Bibliographic InfoPaper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2007-15.
Date of creation: 2007
Date of revision:
Other versions of this item:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-09 (All new papers)
- NEP-EEC-2007-09-09 (European Economics)
- NEP-HRM-2007-09-09 (Human Capital & Human Resource Management)
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- Mireille Elbaum, 2011. "Le financement de la protection sociale : quelles perspectives au-delà des solutions miracles," Documents de Travail de l'OFCE 2011-27, Observatoire Francais des Conjonctures Economiques (OFCE).
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