Job market paper
Wage and Employment Effects of Wage Subsidies
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)
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.
Anatomy of Inequality and Income Dynamics in France (with Philippe Aghion, Vlad Ciornohuz and Stefanie Stantcheva), Preliminary version, comments welcome!
This paper examines income inequality and dynamics in France, using exhaustive administrative panel data. We find that the market income distribution is highly unequal, with the top 1% receiving around 6% of the income. Income mobility is characterized by strong persistence at all income levels and for all age groups. We propose a non-parametric framework that accounts for differences in income risk along the market income distribution, revealing significant differences in income growth moments. Our findings indicate that the distribution of growth rates has high variance, excess skewness and is fat-tailed. In particular, we find a U-shaped pattern for income dispersion along the income distribution. We also investigate the role of redistribution as an insurance tool against income risk and find that transfers are particularly pivotal in reducing income risk for the lower part of the income distribution. We show substantial heterogeneity in income risk across locations, education and occupation groups, and the share of capital in total income. Our study provides new insights into the factors driving income inequality and dynamics in France and highlights the importance of the social-fiscal system in mitigating income risk.
Work in progress
The anatomy of worker flows in distressed firms (with Simon Margolin and Thomas Zuber)
In this paper, we investigate the role of firm bankruptcy procedures in worker and firm dynamics. These procedures aim to limit job destruction by offering firms and workers protection against temporary financial distress and fire sales. However, this is at the cost of a lower reallocation of workers to more productive firms. This paper explores the costs and benefits that workers experience when their employer enters bankruptcy, and how these affect the protection-reallocation trade-off and the design of optimal bankruptcy procedures. We use unique data on bankruptcy filings in France, matched with employer-employee administrative data, to document new facts on the dynamics of worker flows and earnings in distressed firms. To do so, we estimate the causal effect of entering in a more or less stringent bankruptcy procedure using an event-study strategy. Intuitively, the research design compares similar workers in comparable firms, but with one firm entering a bankruptcy procedure entailing its closure. Finally, we build a structural model based on (Guiso et al., 2005; Friedrich et al., 2019) to gauge the welfare effects of bankruptcy procedures.
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.