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Predistribution versus Redistribution: Evidence from France and the United States

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  • Antoine Bozio
  • Bertrand Garbinti
  • Jonathan Goupille-Lebret
  • Malka Guillot
  • Thomas Piketty

Abstract

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.

Suggested Citation

  • Antoine Bozio & Bertrand Garbinti & Jonathan Goupille-Lebret & Malka Guillot & Thomas Piketty, 2024. "Predistribution versus Redistribution: Evidence from France and the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 31-65, April.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:2:p:31-65
    DOI: 10.1257/app.20220023
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    1. Bozio, Antoine & Breda, Thomas & Guillot, Malka, 2020. "The Contribution of Payroll Taxation to Wage Inequality in France," IZA Discussion Papers 13317, Institute of Labor Economics (IZA).
    2. Fack, Gabrielle, 2006. "Are housing benefit an effective way to redistribute income? Evidence from a natural experiment in France," Labour Economics, Elsevier, vol. 13(6), pages 747-771, December.
    3. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
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    Cited by:

    1. Preuss, Marcel & Reyes, Germán & Somerville, Jason & Wu, Joy, 2022. "Inequality of Opportunity and Income Redistribution," VfS Annual Conference 2022 (Basel): Big Data in Economics 264138, Verein für Socialpolitik / German Economic Association.
    2. Matteo Dalle Luche & Demetrio Guzzardi & Elisa Palagi & Andrea Roventini & Alessandro Santoro, 2024. "Tackling the regressivity of the Italian tax system: An optimal taxation framework with heterogeneous returns to capital," LEM Papers Series 2024/26, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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