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Does the French social model have a cost in terms of jobs?
The merits of the French social model, which is indeed favourable and generous (high government spending on pensions and healthcare for families and housing; high unemployment benefits, large-scale redistributive policies, free public education, etc.) are often vaunted. But the key question is whether or not this favourable social model has a cost in terms of jobs. This cost may result from an increase in the tax burden needed to finance the social model, or from the type of taxes that finance it. When comparing the size of welfare spending and redistributive policies, the overall and corporate tax burden and the employment rate between OECD countries, we see that large-scale welfare spending or redistribution is associated with a high tax burden (in particular corporate social contributions) and a low employment rate. This suggests that a very generous social model, as in France, leads to a high tax burden, especially on companies, and a low employment rate.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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