Tax cuts or social investment? Evaluating the opportunity cost of French employment strategy.

Bruno Palier (1, 2) , Clément Carbonnier (3, 2) , Michaël Zemmour (4, 2)

1 CEE - Centre d'études européennes et de politique comparée (Sciences Po, CNRS)
2 LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques (Sciences Po)
3 THEMA - Théorie économique, modélisation et applications
4 CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019

Tax expenditures are widely used by French governments as em-ployment and social policies. Such programmes together amounted to more than 1.3 points of GDP in 2011. Thanks to a systematic review of academic policy evaluations, we assess the efficiency of the different parts of such policies, showing that at least €6 billion is used for policies whose cost is greater than €62,500 per year and job created, and €0.5 billion for policies whose cost is greater than €160,000 per year and job created. We examine the replacement of these tax expenditures by direct public funding for (publicly or pri-vately delivered) "quality" jobs addressing specific social needs. We discuss the conditions under which at least comparable employment performances could be achieved (factoring in the crowding out of privately funded jobs and the properties of created jobs in terms of the service provided or the characteristics of suppliers and consum-ers) as well as any positive economic and social externalities.

Domains: Economics and Finance; Political science

Bruno Palier, Clément Carbonnier, Michaël Zemmour. Tax cuts or social investment? Evaluating the opportunity cost of French employment strategy.. 2014. ⟨hal-01017683⟩