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February 09, 2005
Wedges
Dad sent me a link to a graphic from Investor's Business Daily a while ago.
IBD graphed what they call the wedge -- the sum of employee and employer taxes as a percentage of total income for workers at average earnings -- for a range of countries. The number for France is 48.3%, lower than only Germany and Belgium, and more than 3 times higher than Korea (14.1%). The US level is only a little more than double that of Korea. IBD concludes a lower wedge gives the US an edge in creating jobs. They don't graph wedge levels vs. unemployment under the above link.
Google led me to a brief presentation from someone at Cornell explaining why French unemployment was (and is) higher than US unemployment. The presentor's conclusions are that French employers need to be able to pay their employees less, and that the state should permit employers to renew temp contracts more than once, lower unemployment benefits, shrink the wedge, and have people work longer for the same money.
Posted by Mark at February 9, 2005 08:15 PM