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Finance and the rise in inequalities in France

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  • Olivier Godechot

    ()
    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CMH - Centre Maurice Halbwachs - CNRS : UMR8097 - Université de Caen - Ecole Normale Supérieure de Paris - ENS Paris - Ecole des Hautes Etudes en Sciences Sociales (EHESS), CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

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    Abstract

    Based on the DADS, a very detailed French database on wages, we show that wage inequalities started to increase in France in the mid-1990s. This phenomenon is limited to the top end of income distribution and concerns mainly the top 0.1%, whose share of total salaries increased from 1.2% to 2% between 1996 and 2007. This increase in inequality was accompanied by some changes in the social composition of this wage elite. These include a decline in employees in the provinces, in CEOs; and an increase in lower rank management like chief officers and other administrative managers, in sportspersons, and in Paris Region employees. A sector approach shows that finance (3% of private sector employees) is responsible for half of the rise in inequalities at the top end of wage distribution. We discuss the role of the size of financial activity in the tremendous increase in top financial wages.

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    Bibliographic Info

    Paper provided by HAL in its series Working Papers with number halshs-00584881.

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    Date of creation: Apr 2011
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    Handle: RePEc:hal:wpaper:halshs-00584881

    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00584881/en/
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    Keywords: Inequalities ; wages ; finance ; superstars ; France;

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    1. Brian Bell & John Van Reenen, 2010. "Bankers' Pay and Extreme Wage Inequality in the UK," CEP Special Papers 21, Centre for Economic Performance, LSE.
    2. Thomas Philippon & Ariell Reshef, 2009. "Wages and Human Capital in the U.S. Financial Industry: 1909-2006," NBER Working Papers 14644, National Bureau of Economic Research, Inc.
    3. James Crotty, 2009. "The Bonus-Driven “Rainmaker” Financial Firm: How These Firms Enrich Top Employees, Destroy Shareholder Value and Create Systemic Financial Instability," UMASS Amherst Economics Working Papers 2009-13, University of Massachusetts Amherst, Department of Economics.
    4. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    5. Wojciech Kopczuk & Emmanuel Saez & Jae Song, 2010. "Earnings Inequality and Mobility in the United States: Evidence from Social Security Data since 1937," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 91-128, February.
    6. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," NBER Working Papers 12365, National Bureau of Economic Research, Inc.
    7. Lucian Bebchuk & Yaniv Grinstein, 2005. "The Growth of Executive Pay," NBER Working Papers 11443, National Bureau of Economic Research, Inc.
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    Cited by:
    1. CARPANTIER, Jean-François & SAPATA, Christelle, 2012. "Unfair inequalities in France: A regional comparison," CORE Discussion Papers 2012038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Jean-François Carpantier & Christelle Sapata, 2013. "An Ex-Post View of Inequality of Opportunity in France and its Regions," Journal of Labor Research, Springer, vol. 34(3), pages 281-311, September.
    3. Gusmano, Michael K. & Weisz, Daniel & Rodwin, Victor G. & Lang, Jonas & Qian, Meng & Bocquier, Aurelie & Moysan, Veronique & Verger, Pierre, 2014. "Disparities in access to health care in three French regions," Health Policy, Elsevier, vol. 114(1), pages 31-40.

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