Predistribution vs. Redistribution: Evidence from France and the U.S.

In this paper, Antoine Bozio, Bertrand Garbinti, Jonathan Goupille-Lebret, Malka Guillot, and Thomas Piketty ask two simple empirical questions to quantify predistribution vs. redistribution.

• What is the impact of public policies on inequality?
• What are the relative magnitudes of “redistribution” and changes in pretax income in accounting for the observed evolution of inequality over time and across countries?

To answer these questions, the authors quantify the extent of redistribution over time and decompose the changes in post-tax inequalities into different redistributive policies and changes in pretax inequalities. To estimate these redistributive statistics, the authors construct homogenous annual series of post-tax national income for France over the 1900-2018 period and compare them with those recently constructed for the U.S.

>> Click here to see the data

Key Results

• First, redistribution has increased in both countries over the period, earlier in the U.S., later in France, to reach similar levels today (Figure F4b)
• Second, the substantial long-run decline in post-tax inequality in France over the 1900-2018 period is due mostly to the fall in pretax inequality (accounting for three quarters of the total decline), and to a lesser extent to the direct redistributive role of taxes, transfers and other public spending (about one quarter) (Table T2).
• Third, the reason why overall inequality is much smaller in France than in the U.S. is entirely due to differences in pretax inequality (Figure F3b).

Figure – Predistribution vs. Redistribution: Inequality in France vs. U.S.

This figure attempts to quantify predistribution vs. redistribution and shows the impact of redistribution on inequality in France versus the United States.

Policy Recommendations

The authors findings suggest that policy discussions on inequality should, in the future, pay more attention to policies affecting pretax inequality and should not focus exclusively on “redistribution”.

Contacts

Authors

• Antoine Bozio (PSE; EHESS ;IPP): antoine.bozio@ipp.eu
• Bertrand Garbinti (CREST-ENSAE-IP Paris, WIL): bertrand.garbinti@ensae.fr
• Jonathan Goupille-Lebret (Univ Lyon, CNRS, ENS de Lyon, GATE UMR 5824, F69342 Lyon, France): jonathan.goupille-lebret@ens-lyon.fr
• Malka Guillot (ETH Zürich, IPP, WIL): malka.guillot@ipp.eu
• Thomas Piketty (EHESS; PSE; WIL): thomas.piketty@psemail.eu

Media inquiries
• Olivia Ronsain: olivia.ronsain@wid.world; +33 7 63 91 81 68

Acknowledgments

The research leading to these results has received funding from the European Research Council under the European Union’s Seventh Framework Programme, ERC Grant Agreement n. 856455 and from the French National Research Agency (ANR) research program (reference: ANR-19-CE41-0011, ANR-17-EURE-0001). Access to some confidential data, on which is based this work, has been made possible within a secure environment offered by CASD – Centre d’accès sécurisé aux données (Ref. ANR-10-EQPX-17).