The Impact of Social Security in Labour Market: Evidence from France/EFFETS DE LA SÉCURITÉ SOCIAL DANS LE MARCHÉ DU TRAVAIL: PREUVE DE FRANCE

Article excerpt

Abstract:

This paper investigates the relationship between social security and laobour market in France and calculates the regression relation among social security expenditure,social security contribution,enterprise investment and unemployment rate.The results Indicated that the labour market has a closed relevance with social security. Reducing the social security contribution of enterprise is an important means to control the unemployment.And the proper level social security expenditure is the most crucial factor to keep the beneficial cycle between social security and laobour market .

Key words: Social Security Contribution, Social Security Expenditure, Labour Market

Résumé: Dans cet article, on fait des enquêtes et des analyses sur la relation entre la sécurité sociale et le marché du travail dans la société française, et des calcules des relations entre l'offre de la sécurité sociale, des investissments d'entreprises, et du chômage ; la baisse de la charge d'entreprise sur la sécurité sociale est très effective pour baisser le chômage ; le traitement convenable de la société sociale est la clé pour garder la bonne circulation entrela sécurité et le marché du travail.

Mots-Clés: sécurité sociale cotisation, sécurité sociale dépense, marché du travail

1. INTRODUCTION

The relationship between social sesurity and labour market has long been noticed in the ecomomics research field. As an income redistribution means, the social security expenditure will be a part of labour cost. Therefore, social security must enhance the labour cost and effect the labour demand of employer. Furthermore, the high level social security expenditure perhaps leads to the increase of voluntary unemployment and early retirement. The active mechanism between social sesurity and labour market can be described as follows:

In this paper, we adopt the data from 1985 to 2004 of France to inspect the correlativity between social security and labour market. And hope to find a method to effect the labour market by adjustment of social security.

2. EMPIRICAL ANALYSIS OF SOCIAL SECURITY IMPACT IN FRENCH LABOUR MARKET

2.1 Status of Social Security Expenditure and Unemployment in France

Social security expenditure in france is always a huge amount. It is almost 30% of french GDP In the mean time a fairly high rate of chronic unemployment has placed great pressure upon the job market. Table 1 displays the two factors changes from 1985 to 2004:

The social security expenditure and the unemployment rate have been keeping the high level for a long time. The persons unemployed for 12 months or more have occupied above 40% of the total unemployed persons. The data show that the serious disturbance between labour demand and supply has happened in french labour market. And we can find that the trend of the unemlpoyment is very similar to that of the social security expenditure from the figure 1.

2.2 Correlation Analysis of Social Security Contribution and Unemployment

According to the active mechanism between social sesurity and labour market, the high level social security expenditure will result in the high contribution of enterprise. The french employers must turn more than 30% of payrolls to the social security for there employees.

And the enterprise contribution burdon is getting more and more heavy in the view of the time trend. This has been a most important portion of the labour cost of french enterprise.

Table 3 shows that the social security contribution burdon of french employee is much lighter than that of employer. The most social security revenue have to depend on the enterprise contribution. With the increasing of the social security expenditure, the tax on the average worker is nearly half of the total labour cost of French enterprise.

Such heavy social security burdon must bring out the decrease of the profit of the enterprise if the price of the product is still kept markering competitiveness. …