Insee Analyses · September 2023 · n° 88

Extended redistribution, including all monetary transfers and public services, improves the standard of living of 57% of people in France

Taxes and social security contributions finance pensions, welfare benefits and public services, whether individually provided, such as education or health, or collective, such as defence or research. All such public transfers, whether deducted from or received by households, create a so-called extended redistribution. This redistribution extends to all public services and including pensions corresponds to an annual net transfer of 500 billion euros (25% of net national income in 2019) and contributes to a significant reduction in income inequality. In 2019, 57% of people are receiving more than they pay in France. This share of people who are net beneficiaries – those who receive more than they pay – of extended redistribution amounts to 49% of the median standard of living, compared to over 85% among the poorest 30% and 13% among the top 5%, essentially through pensions for the latter. Before transfers, better-off households have an income 18 times higher than that of poor households, compared to 3 times higher after transfers.

Extended redistribution enhances the standard of living of 90% of individuals belonging to a household where the reference person is aged 65 or over; these are the main recipients of health spending and the pay-as-you-go pension system. On the other hand, nearly 70% of individuals aged 50-59 are net contributors to extended redistribution. Aside from pensioners, net beneficiaries of extended redistribution are mainly the poorest, in addition to families with children and households with fewer qualifications; for manual and white-collar workers, the redistribution assessment is close to neutral, while executives, self-employed workers and company managers are net contributors – those who pay more than they receive –, along with intermediate profession to a lesser extent. Redistribution also reduces inequality between residents of the Paris metropolitan area with higher primary incomes and those in region outside Paris. The net contributors are therefore wealthy, working households, aged between 40 and 60, and are predominantly executives or residents of urban areas.