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Tax cuts or social investment? Evaluating the opportunity cost of French employment strategy

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Listed:
  • Clément Carbonnier
  • Bruno Palier
  • Michaël Zemmour

Abstract

Tax expenditures are widely used by French governments as employment and social policies. Such programmes together amounted to more than 1.3 points of GDP in 2011. Thanks to a systematic review of academic policy evaluations, we assess the efficiency of the different parts of such policies, showing that at least €6 billion is used for policies whose cost is greater than €62,500 per year and job created, and €0.5 billion for policies whose cost is greater than €160,000 per year and job created. We examine the replacement of these tax expenditures by direct public funding for (publicly or privately delivered) "quality" jobs addressing specific social needs. We discuss the conditions under which at least comparable employment performances could be achieved (factoring in the crowding out of privately funded jobs and the properties of created jobs in terms of the service provided or the characteristics of suppliers and consumers) as well as any positive economic and social externalities.

Suggested Citation

  • Clément Carbonnier & Bruno Palier & Michaël Zemmour, 2016. "Tax cuts or social investment? Evaluating the opportunity cost of French employment strategy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(6), pages 1687-1705.
    • Handle: RePEc:oup:cambje:v:40:y:2016:i:6:p:1687-1705.
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    Cited by:

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    3. Lin, Boqiang & Jia, Zhijie, 2019. "Tax rate, government revenue and economic performance: A perspective of Laffer curve," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    4. Askenazy, Philippe & Palier, Bruno, 2018. "France: rising precariousness supported by the welfare state," CEPREMAP Working Papers (Docweb) 1801, CEPREMAP.

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