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Inequalities: the weaknesses of the French model

One study notes that France is more egalitarian than the United States, but that the US redistribution system is more efficient than ours.

The Hexagon, champion of redistribution? Not so sure. According to a study published Tuesday, September 25 by researchers at the World Inequality Lab (WIL), including economist Thomas Piketty, and the Institute of Public Policy (IPP), contributions, taxes and social transfers in France have been less effective over the last thirty years in reducing inequalities than they have been in the United States. This observation is surprising, since, at the same time, France remains much more egalitarian … Explanations.

A passenger waves a French and American flag on July 1, 2017, as the Cunard cruise liner RMS Queen Mary 2 arrives to New York city after sailing in the Atlantic ocean during the Bridge 2017, a transatlantic race between the cruise liner and the world’s fastest Ultim trimarans from Saint-Nazaire, France, to New York city, USA. / AFP PHOTO / LOIC VENANCE

Inequalities before taxes have increased in France

While income and wealth disparities have been steadily decreasing throughout the 20th century, the gap between rich and poor has increased significantly in France since the 1980s. The “turning point of rigor” François Mitterrand, signed the end of the indexation of wages on prices. A stall aggravated by the evolution of the balance of power in the world of work and the rise of unemployment.

By focusing on incomes (labor and capital), the new report coordinated by the WIL and the IPP clearly shows this increase in inequalities before taxes in France between 1990 and 2018. Over the period, the share of total income held by the richest 10% grew by 6%, from 30% to 32%. Conversely, that of the lowest 50% fell by 8%, falling from 24% to 22%.

As other work on the subject has already shown, the phenomenon is even more marked in the United States. Over the last thirty years, the poorest half of the population has seen its share fall by 25.6%, when that of the richest 10% increased by 20.5%. Rich Americans today capture more than 47% of total income.

The American system is more redistributive

Do redistributive policies mitigate these inequalities? Undoubtedly….

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