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Job market paper

Wage and Employment Effects of Wage Subsidies

[Paper]

Abstract: This paper estimates the wage and employment effects of wage subsidies using a large 2015 national-level reform in France that provides additional financial support to poor working households. While the aim of this policy is to promote work, it can incidentally reduce wages in response to an increase in the labor supply. Using administrative data and a shift-share IV design leveraging variation in the exposure to the reform based on the socio-economic composition of the local working-age population, I show that labor markets exposed to an increase in wage subsidies experience an increase in the growth rate of the number of hours worked and a decrease in the growth rate of the average hourly wage. I find no significant effect on pre-tax labor earnings growth at the local labor market level, as the wage and employment effects are of similar magnitude. These effects suggest a passthrough of wage subsidies to wages equal to 37% on average.



Working papers

Tax Simplicity or Simplicity of Evasion? Evidence from Self-Employment Taxes in France with Ufuk Akcigit, Philippe Aghion, Mathieu Lequien and Stefanie Stantcheva.

[Paper]

Abstract: We exploit individual panel information from introducing of new and simpler tax regimes for the self-employed in France, in order to assess the extent to which individuals’ shift towards the new regimes is driven by a quest for tax simplicity, and the extent to which the demand for tax simplicity is itself at least partly driven by tax evasion motives. We find evidence of a quest for tax simplicity from observing a significant amount of bunching at the eligibility thresholds for the simpler self-employment tax regimes and from the fact that bunching is increasing in the degree of simplicity of the self-employment regime. We also argue that tax evasion plays an important role in accounting for individuals’ attraction towards simpler tax regimes. Finally, we quantitatively assess the importance of simplicity and evasion motives for choosing a simpler self-employment regime. More precisely, we combine bunching estimates and a structural model to jointly estimate the real income elasticities, the value of tax simplicity, and the evasion elasticity. We find that the parameters values which generate the best fit with the observed bunching across different tax brackets and years, imply noticeable preference for tax simplicity with a sizeable evasion elasticity behind it, and a negligible real income elasticity.

Income Dynamics in France with Philippe Aghion, Vlad Ciornohuz and Stefanie Stantcheva. (coming soon)



Work in progress

The anatomy of worker flows in distressed firms with Simon Margolin and Thomas Zuber.



Seminar

I am one of the co-organizer of a joint seminar between the College de France and the INSEAD. If you want to present at the seminar and book a date, please send an email with the title of your paper.