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The Contribution of Payroll Taxation to Wage Inequality in France

Abstract : Over the 1967-2015 period, net wage inequality has decreased in France by 25%, in contrast to the significant increase experienced by most developed countries. Less well known is the fact that labor cost inequality has actually increased by 8% over the same period. We show that, (a) standard demand-side explanations for the rise in inequality apply in France when tested using measures of labor cost (as they should be); (b) reforms to payroll taxation, jointly with increases in the minimum wage, can explain a large part of the decrease in net wage inequality, in the context of increasing market inequality.
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Submitted on : Friday, June 5, 2020 - 2:37:45 PM
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Malka Guillot, Antoine Bozio, Thomas Breda. The Contribution of Payroll Taxation to Wage Inequality in France. 2020. ⟨halshs-01294599v2⟩

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