Payroll tax reductions and job flows in France

Abstract

In France, policies that aim at reducing labour cost have extended to more and more workers since the beginning of the 90s. Evaluations of the effect of payroll tax reduction often use estimations of labour demand equations. In this paper, we consider the impact of labour tax cuts on job creations and destructions through the Fillon reform (2003), by using a fixed effect instrumental variable approach and a sectora l pseudo panel dataset. Over 2002-2005, our estimates show that PTR let job flows unchanged