Determinants of the Evolution of Income Inequality in France, 1970–2019

ABSTRACT This article analyzes the evolution of income inequality in France between 1970 and 2019 and breaks down these variations into the respective contributions of changes in family compositions, occupations, individual earnings, taxes and social benefits, using a semi‐parametric decomposition approach by sub‐periods. Earnings and retirement pensions had a strong contribution to the decline in inequality during the 1970s and 1980s, before a neutralization and even a recent reversal of the impact. Changes in family compositions, particularly the rise of single‐parent households, led to a moderate but continuous rise in inequality. The strong increase in female employment during that period did not lead to a uniform fall in inequality of household equivalized income, partly because of homogamy. Overall, direct taxes and social benefits have been more and more inequality‐decreasing across the period, although this trend was temporarily reversed during the first decade of the 21st century.