This research paper, published in *The Review of Economic Studies*, has significant implications for how we think about our social protection system, and this has been duly noted by French policymakers, who regularly cite this research paper – for example, in debates on Pensions, by the Pensions Advisory Council, or in discussions on funding for social protection. This research extends beyond the French context and is now regarded as a benchmark in studies on social protection in Europe. The clearest implication for public policy is that it is necessary to maintain a clear link between contributions and benefits if we are to capitalise on the efficiency of social security contributions as a means of raising revenue.
Does the Link Between Tax and Benefits Affect the Incidence of Payroll Taxes?
This research article, published in *The Review of Economic Studies*, uses changes to employer social security contributions in France to estimate their impact on wages – that is, the extent to which an increase in employer social security contributions does or does not result in a fall in gross wages. The paper highlights the importance of the contributory link, which distinguishes social security contributions from taxes.
Reference The Review of Economic Studies. Vol. 93. No. 3.
Presentation
Key Results
The article highlights the importance of the contributory link, which distinguishes social security contributions from taxes: when this link is strong and visible, employer social security contributions are passed on in full to wages, implying that it is indeed the employees who pay for their own pensions. Conversely, when this link is absent, employer social security contributions are perceived as taxes on firms and are not passed on individually to employees’ wages, but are borne by the firm as a whole, including all employees.
Partners
This article is the result of one of the first IPP projects, funded by the ANR (ANR-12-ORAR-0004) as part of the Open Research Area (ORA) programme between 2012 and 2015. This European collaborative effort involved the IFS in the United Kingdom, the Centraal Plan Bureau in the Netherlands and the DIW Berlin in Germany. The project led to several academic Publications by the French team in *De Economist*, *The Journal of Public Economics* and, finally, *The Review of Economic Studies*.