Widening of the Social Security Basis: From a Wage to a Value Added Basis - Impact on French Non Financial Firms (In French)

43 Pages Posted: 7 Jan 2011

See all articles by Gilbert Cette

Gilbert Cette

Banque de France

Elisabeth Kremp

National Bureau of Economic Research (NBER); Banque de France - Direction des Entreprises

Date Written: November 1996

Abstract

It is often claimed that the current basis upon which the French social security contributions are calculated, namely the wage bill, penalises employment, by increasing labor costs and consequently encouraging firms to substitute capital for labor. Broadening this basis by incorporating some elements of capital income is sometimes presented as an alternative that has less negative effect on employment. Using a variance analysis based on annual balance sheet data for 113 000 non financial firms liable to corporate tax, this study tries to characterise the firms that benefit most (or suffer least, which is equivalent), in terms of social security contributions, from a widening of the contribution basis. Several alternatives of this wider social security tax base are tested, depending on the value added definition chosen.

Note: Downloadable document is in French.

Keywords: Social Contribution, Wage, Employment, Firms

JEL Classification: J30, E25

Suggested Citation

Cette, Gilbert and Kremp, Elisabeth M., Widening of the Social Security Basis: From a Wage to a Value Added Basis - Impact on French Non Financial Firms (In French) (November 1996). Banque de France Working Paper No. 41, Available at SSRN: https://ssrn.com/abstract=1734777 or http://dx.doi.org/10.2139/ssrn.1734777

Gilbert Cette (Contact Author)

Banque de France ( email )

Paris
France

Elisabeth M. Kremp

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Banque de France - Direction des Entreprises

39 rue Croix des Petits Champs
Paris Cedex 01 75049
France

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