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Rising markups drove income inequality in France

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Research area:economics-policyeconomic-theory

What the study found

The study finds that rising markups were the main driver of income inequality in France. It also finds that taxation, markups, and asset prices all contributed to wealth inequality.

Why the authors say this matters

The authors conclude that the findings help explain how income and wealth inequality have evolved in France since 1984. They also say the results highlight the role of differential asset price movements and endogenous saving responses in shaping wealth inequality over time, where endogenous saving means households change how much they save in response to economic conditions.

What the researchers tested

The researchers used a heterogeneous-agent model, meaning a model that allows different households to behave differently. The model combined endogenous portfolio choice, a detailed representation of the tax-and-transfer system, and a reduced-form link between markups and top incomes through entrepreneurial risk. They paired this with counterfactual simulations and a simple accounting decomposition of wealth accumulation.

What worked and what didn't

The model accounted for the observed trends in income and wealth inequality in France since 1984, including the top 1% income and wealth shares. The analysis identified rising markups as the primary driver of income inequality, while taxation, markups, and asset prices all made significant contributions to wealth inequality.

What to keep in mind

The abstract does not report limitations beyond the study's focus on France since 1984. It also does not provide details on model uncertainty, alternative explanations, or how strongly each mechanism contributed beyond the qualitative ranking described.

Key points

  • Rising markups were identified as the main driver of income inequality.
  • Taxation, markups, and asset prices all contributed to wealth inequality.
  • The model matched observed inequality trends in France since 1984, including top 1% shares.
  • The study used counterfactual simulations and an accounting decomposition of wealth accumulation.
  • The authors highlight differential asset price movements and endogenous saving responses in wealth inequality.

Disclosure

Research title:
Rising markups drove income inequality in France
Authors:
Stéphane Auray, Aurélien Eyquem, Bertrand Garbinti, Jonathan Goupille-Lebret
Institutions:
Center for Economic Research on Governance, Inequality and Conflict, Centre de Recherche en Économie et Statistique, Centre de Recherche en Économie et Statistique, Centre for Research in Engineering Surface Technology, Centre National de la Recherche Scientifique, École Nationale d'Administration, École Nationale de la Statistique et de l'Analyse de l'Information, École Normale Supérieure de Lyon, École Supérieure de Commerce de Rennes, University of Lausanne
Publication date:
2026-02-26
DOI:
10.1093/jeea/jvag009
OpenAlex record:
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AI provenance: This post was generated by gpt-5.4-mini (OpenAI). The original authors did not write or review this post.

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