This chapter describes France as apparently one of the few rich countries to have avoided a significant increase in income inequality in recent decades. However, stable average inequalities mask an asymmetric trend of income between age groups, the elderly improving their situation while the young see theirs worsening. Furthermore, it shows that behind this relatively still surface, a general trend of precarization of more and more ordinary workers is occurring. The importance of wage-setting processes and of regulation of the labour market is brought out, together with the way the tax and transfer systems have operated, in restraining the forces driving inequality upwards. Wage growth, while limited, has thus been reasonably uniform across the distribution and together with the redistributive system have kept household income inequality within bounds. However, in response to high unemployment both regulatory and tax–transfer systems have served to underpin the very rapid growth in precarious working over the last decade, representing a very serious challenge for policy.
Wage bargaining as an optimal control problem: a dynamic version of the efficient bargaining model
