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

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  • Antoine Bozio

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Thomas Breda

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Malka Guillot

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

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," PSE Working Papers halshs-01294599, HAL.
  • Handle: RePEc:hal:psewpa:halshs-01294599
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01294599
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Pierre Pora & Lionel Wilner, 2019. "Decomposition of Labor Earnings Growth: Recovering Gaussianity?," Working Papers 2019-03, Center for Research in Economics and Statistics.
    3. Luca Bittarello & Francis Kramarz & Alexis Maitre, 2018. "The Task Content of Occupations," Working Papers 2018-16, Center for Research in Economics and Statistics.
    4. Carla Krolage & Andreas Peichl & Daniel Waldenström, 2018. "Richer or more Numerous or both? The Role of Population and Economic Growth for Top Income Shares," CESifo Working Paper Series 7385, CESifo Group Munich.
    5. Ch.-M. CHEVALIER, 2018. "Consumption inequality in France between 1995 and 2011," Documents de Travail de l'Insee - INSEE Working Papers g2018-07, Institut National de la Statistique et des Etudes Economiques.

    More about this item

    Keywords

    Wage inequality; Labour cost; Social Security contributions; Tax incidence;

    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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