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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)

Abstract: This paper measures the distribution of income growth at the individual level over the period 2006-2017. While most of the recent literature has mainly focus its attention on labour earnings dynamics, we take a broader perspective by investigating pre-tax income and post-tax income. We use two newly available administrative panel data on the French population. First, a panel of tax returns covering the French population between 2006-2017. Second, a random sample of 4% of the French population containing tax returns, social benefits and census variables. We build on the recent literature on income dynamics and propose a non-parametric framework that accounts for differences in income risk along the income distribution. We find that the mean, variance, skewness and kurtosis of income growth differ significantly along the pre-tax income distribution. Interestingly, redistribution does not significantly reduce the income risk. Finally, we explore heterogeneity in income growth across education groups and occupations. We find that individuals with a lower level of education or in low occupation groups experience lower income growth on average. Interestingly, redistribution do not significantly reduce these differences in income growth.



Work in progress

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

Abstract: 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.