Antoine Bozio

We estimate behavioral responses to dividend taxation using recent French reforms: a rate hike followed, five years later, by a cut. Exploiting household and firm tax data as well as data linking firms and shareholders, we find very large dividend tax elasticities to both reforms. Individuals who control firms adjust dividend receipts instantaneously, accounting for most of the aggregate dividend reaction. Investment is insensitive to dividend taxation. Dividend adjustments are instead driven by corporate saving, as owner-managers treat firms as low-tax saving vehicles. Our results fit the ‘new view’ of dividend taxation, provided an additional low-tax yet costly payout option is available that offers a tax arbitrage opportunity to entrepreneurs in control of their firms.

The evolution of labour market and disposable income inequalities over recent decades in high‐income countries has generated intense interest in academia and the wider public. The extent to which there have been common trends, or diverging experiences, across a broad range of different countries, remains relatively understudied. The papers in this two‐part special issue seek to provide the bases for consistent comparisons across 17 North American and European countries. In this Introduction we provide background for the cross‐country project, which has been conducted in parallel to the wider IFS Deaton Review of Inequalities. In addition, we provide brief summaries of key trends and findings in the four English‐speaking countries and four Nordic countries, as well as a companion paper on gender pay gaps across all 17 countries.

We construct series of posttax income for France over the 1900–2018 period and compare them with US series. We quantify the extent of redistribution—the reduction from pretax to posttax inequality—and estimate the contribution of redistribution in explaining differences in posttax inequality. We find that differences in pretax inequality drive most of the differences in posttax inequality between France and the United States, and that changes over time in both countries are mostly due to changes in pretax inequality. We highlight that the concept of redistribution can be empirically misleading for judging how policies reduce inequalities.

This short paper presents an overview of the French policy mix towards labour market inequalities, consisting of a high minimum wage together with targeted payroll tax cuts around the minimum wage. It reviews the recent literature documenting the impact of that policy mix on employment and wage inequality. The main takeaways are that pre‐tax wage inequality has been increasing in France rather like it has in the UK and the US, while net wage inequality has decreased and then remained stable. The employment experience for the middle age group is also very close in France to the one in the UK and the US, while it differs markedly at young and older ages. The paper offers two more general thoughts on how to make progress in comparing policy options. First, most studies tend to give too much weight to tax and benefit reforms in being able to reduce inequality as they disregard incidence mechanisms, and fail to incorporate properly longer‐term effects of other policies on pre‐tax inequality. Second, the design of effective policy should always incorporate simplicity and salience. Failure to do so is likely to lead to little expected impact of such policies.