De Economist

, Volume 165, Issue 2, pp 141–163 | Cite as

Incidence and Behavioural Response to Social Security Contributions: An Analysis of Kink Points in France

Article

Abstract

We study the incidence of social security contributions (SSCs) in France relying on the strategy developed by Alvaredo et al. (De Econ, 2017. doi: 10.1007/s10645-017-9294-7). This strategy infers the incidence of SSCSs from the discontinuities in earnings distributions created by kink points in the SSC schedule. Using administrative data on earnings for the period 1976–2010, we study approximately 200 such kink points and do not find that they systematically induce a discontinuity in the distribution of gross earnings. This allows us to reject the hypothesis that SSCs are incident on workers, at least locally around kinks. Additionally, we exploit the large variations in SSC rates across kinks and years to estimate the local incidence of both employer and employee SSCs around these thresholds. We find that employer SSCs are shifted to employers while employee SSCs are shifted to employees. These findings are consistent with the economic incidence of SSCs being aligned with their statutory incidence, locally around kink points.

Keywords

Social security contributions Payroll tax Tax incidence 

JEL Classification

H22 H55 J32 

References

  1. Alvaredo, F., Breda, T., Roantree, B., & Saez, E. (2017). Contribution ceilings and the incidence of payroll taxes. De Economist. doi: 10.1007/s10645-017-9294-7.
  2. Bosch, N., & Micevska-Scharf, M. (2017). Who bears the burden of social security contributions in the Netherlands? Evidence from Dutch administrative data. De Economist. doi: 10.1007/s10645-017-9296-5.
  3. Bozio, A., Breda, T., & Grenet, J. (2017). Incidence of social security contribution: Evidence from France. Working paper.Google Scholar
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  5. Müller, K.-U., & Neumann, M. (2017). Who bears the burden of social security contributions in Germany? Evidence from 35 years of administrative data. De Economist. doi: 10.1007/s10645-017-9298-3.
  6. Neumann, M. (2015). Earnings responses to social security contributions: Evidence from two German administrative data sets. DIW discussion paper no. 1489.Google Scholar

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Paris School of Economics (PSE) and EHESSParisFrance
  2. 2.Paris School of Economics (PSE) and CNRSParisFrance

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