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Incidence and Behavioural Response to Social Security Contributions: An Analysis of Kink Points in France

Author

Listed:
  • Antoine Bozio

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Thomas Breda

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Julien Grenet

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

We study the incidence of social security contributions (SSCs) in France relying on the strategy developed by Alvaredo et al. (De Econ, 2017. doi:10.1007/s10645-017-9294-7). This strategy infers the incidence of SSCSs from the discontinuities in earnings distributions created by kink points in the SSC schedule. Using administrative data on earnings for the period 1976–2010, we study approximately 200 such kink points and do not find that they systematically induce a discontinuity in the distribution of gross earnings. This allows us to reject the hypothesis that SSCs are incident on workers, at least locally around kinks. Additionally, we exploit the large variations in SSC rates across kinks and years to estimate the local incidence of both employer and employee SSCs around these thresholds. We find that employer SSCs are shifted to employers while employee SSCs are shifted to employees. These findings are consistent with the economic incidence of SSCs being aligned with their statutory incidence, locally around kink points.

Suggested Citation

  • Antoine Bozio & Thomas Breda & Julien Grenet, 2017. "Incidence and Behavioural Response to Social Security Contributions: An Analysis of Kink Points in France," PSE-Ecole d'économie de Paris (Postprint) hal-01629379, HAL.
    • Handle: RePEc:hal:pseptp:hal-01629379
    DOI: 10.1007/s10645-017-9297-4
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    References listed on IDEAS

    as
    1. Facundo Alvaredo & Thomas Breda & Barra Roantree & Emmanuel Saez, 2017. "Contribution Ceilings and the Incidence of Payroll Taxes," De Economist, Springer, vol. 165(2), pages 129-140, June.
    2. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    3. Neumann, M., 2017. "Earnings responses to social security contributions," Labour Economics, Elsevier, vol. 49(C), pages 55-73.
    4. Nicole Bosch & Maja Micevska-Scharf, 2017. "Who Bears the Burden of Social Security Contributions in the Netherlands? Evidence from Dutch Administrative Data," De Economist, Springer, vol. 165(2), pages 205-224, June.
    5. Kai-Uwe Müller & Michael Neumann, 2017. "Who Bears the Burden of Social Security Contributions in Germany? Evidence from 35 Years of Administrative Data," De Economist, Springer, vol. 165(2), pages 165-179, June.
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    Cited by:

    1. Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2009. "The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 99(5), pages 2209-2226, December.
    2. Carbonnier, Clément & Malgouyres, Clément & Py, Loriane & Urvoy, Camille, 2022. "Who benefits from tax incentives? The heterogeneous wage incidence of a tax credit," Journal of Public Economics, Elsevier, vol. 206(C).
    3. Kai-Uwe Müller & Michael Neumann, 2017. "Who Bears the Burden of Social Security Contributions in Germany? Evidence from 35 Years of Administrative Data," De Economist, Springer, vol. 165(2), pages 165-179, June.
    4. repec:hal:spmain:info:hdl:2441/4ljbipbf1o9r3p7pcm99m06e3e is not listed on IDEAS
    5. Clément Carbonnier & Clément Malgouyres & Loriane Py & Camille Urvoy, 2019. "Wage Incidence of a Large Corporate Tax Credit: Contrasting Employee - and Firm - Level Evidence," Post-Print hal-03393095, HAL.
    6. Facundo Alvaredo & Thomas Breda & Barra Roantree & Emmanuel Saez, 2017. "Contribution Ceilings and the Incidence of Payroll Taxes," De Economist, Springer, vol. 165(2), pages 129-140, June.
    7. Nicole Bosch & Casper Ewijk & Maja Micevska Scharf & Sander Muns, 2022. "The Incidence of Pension Contributions: A Panel Based Analysis of the Impact of Pension Contributions on Labor Cost, Wages and Labor Supply," De Economist, Springer, vol. 170(1), pages 107-132, February.
    8. Clément Carbonnier & Clément Malgouyres & Loriane Py & Camille Urvoy, 2019. "Wage Incidence of a Large Corporate Tax Credit: Contrasting Employee - and Firm - Level Evidence," Working Papers hal-03393095, HAL.
    9. repec:spo:wpmain:info:hdl:2441/4ljbipbf1o9r3p7pcm99m06e3e is not listed on IDEAS
    10. Clément Carbonnier & Clément Malgouyres & Loriane Py & Camille Urvoy, 2019. "Wage Incidence of a Large Corporate Tax Credit: Contrasting Employee - and Firm - Level Evidence," Post-Print hal-03393095, HAL.

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    More about this item

    Keywords

    Social security contributions; Payroll tax; Tax incidence;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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