How can France break its vicious circles?

Series on the debates of the French presidential campaign – No. 9 This Flash looks at important mechanisms for the economic policy debate in France’s presidential campaign. We begin with a comparison of OECD countries, which shows that low labour force skills are associated with both a low employment rate and a low industry share of the economy. This is easy to understand. However, a low employment rate and a low industry share both lead to high income inequality before redistribution. This high income inequality requires France to implement large-scale redistributive policies, which return income inequality to a low level after redistribution. But, significantly, these redistributive policies are financed by a high tax burden, in particular by high corporate tax, in a form (social contributions and production taxes) that drives the employment rate and industry share lower again . There is a clear double vicious circle here : a low employment rate and a low industry share lead to an even lower employment rate and industry share through their effect on redistributive policies and the financing of these policies. To break this double vicious circle, the only solution is to improve skills, a point we have addressed previously at length. Series on the debates of the French presidential campaign ( a lready published): France: The issue of energy transition France: The issue of purchasing power Low skills are at the heart of France’s structural problems Reshoring and reindustrialisation in France: Is there hope? France: The issue of public finances France’s innovation and digitalisation shortfall France: The issue of inequality France: What happened in the early 2000s?