Marketig

Top Incomes in France: booming

inequalities?

Camille Landais

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Paris School of Economics

June 2008

Abstract

I study the evolution of top incomes in France, using income tax tabulations, and confronting them with data from a large sample of households with

exhaustive sampling at the upper end of the income distribution, issued by

the French tax administration. Results exhibit a strong increase in market

income inequalities measured by top income shares since the late 1990s. The

surge in top wages at the top 1% and top 0.1% of the wage distribution is

predominantly responsible for the explosion of top income shares, and puts

an end to 30 years of stability of the French wage hierarchy. I show that

top income and top wage mobility is low, stable, and comparable to that in

Canada (where income concentration is 2 times higher) and cannot be responsible for this surge in top income and top wage shares. Neither can the decline

of top marginal income tax rates fully explain this evolution through effects

on reported incomes. However, in a context of strengthened European tax

competition and increased high-skilled labor mobility, my results suggest that

France, along with other European countries may be on its way to bridging

part of its “top income gap” with English-speaking countries.

1

Paris School of Economics. Contact:48 Bv Jourdan, 75014 Paris, Tel:+33(0)1 43 13 63 37.

E-mail: camille.landais(at)ens.fr.

Acknowledgements: I am grateful to Thomas Piketty, Emmanuel Saez, Tony Atkinson, Eric Maurin, Facundo Alvaredo, Pierre-Yves Cabannes, Cl´ment Carbonnier, Gabrielle Fack, Julien Grenet,

e

Antoine Bozio, Laurent Bach and participants of the Lunch Seminar at Paris School of Economics

for their helpful comments. All errors, of course, are mine alone.

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Introduction

This paper uses exhaustive fiscal data edited every year by French fiscal administration to study the evolution of income inequalities in France in the latest years...