Front Matter Page

©1998 International Monetary Fund

December 1998

IMF Staff Country Report No. 98/132

France: Selected Issues

This Selected Issues report on France was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of France or the Executive Board of the IMF.

International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

FRANCE

Selected Issues

Prepared by Alessandro Zanello, Ousmane Doré (all EU1), and Olivier Jeanne (RES)

Approved by European I Department

October 1, 1998

Contents

• I. France: Fiscal Stabilizers Under EMU

  • A. Introduction and Summary

  • B. Fiscal Policy During 1970–97: Some Stylized Facts

  • C. The Operation of Fiscal Stabilizers

  • D. Should Fiscal Policy Become More Countercyclical Under EMU?

  • E. What is the Size of the Structural Deficit That Would Allow the Fiscal Stabilizers to Operate Effectively Under the Stability and Growth Pact?

• References

• Tables

• I.1. Co-movements in GDP and General Government Revenues

• I.2. Co-movements in GDP and General Government Expenditures

• I.3. Fiscal Developments, 1992–96

• I.4. Frequency of Breaches in the Three Percent Deficit Limit: Univariate Estimates

• I.5. Frequency of Breaches in the Three Percent Deficit Limit

• Figures

• I.1. General Government Revenues and Expenditures

• I.2. General Government Expenditures

• I.3. General Government Revenues

• I.4. General Government Balance

• I.5. General Government Consolidated Gross Debt

• I.6. General Government Balance and Output Gap

• I.7. General Government Primary Structural Balance and Output Gap

• I.8. Output Gaps in France, Germany, and The Euro Zone

• II. The 35-Hour Workweek Initiative

  • A. The 35-Hour Workweek in Perspective

  • B. The Legal Framework

  • C. The Economic Effects of a Reduction in Work Time

  • D. Conclusions

• Tables

• II.1. Trends in Average Annual Hours Worked per Employed Person

• II.2. Duration of Workweek and Paid Vacation: Selected Countries

• II.3. Selected Countries: Labor Market Indicators

• II.4. Effective Duration of Work for Selected Countries

• II.5. Frequency Distribution of Work Time by Year

• II.6. Frequency Distribution of Work Time by Sector (1995)

• II.7. Structure of Fiscal Incentives

• Figures

• II.1 Work Time Norms 1830–1998

• II.2. Hours Worked and Unemployment for Selected Countries

• III. Unemployment and French Labor Market Institutions

  • A. Introduction

  • B. The Magnitude of Structural Unemployment in France

  • C. A Bird’s Eye View of the Literature on Structural Unemployment in Europe

  • D. The Role of Institutional Factors: The French Case

  • E. Recent Policy Measures

  • F. Possible Policy Options

  • G. Conclusions

• References

• Text Boxes

• III.1. Examples of Employment Programs Involving Fiscal Transfers

• III.2. Examples of Schemes Involving Minimum Wage Concessions/Training

• Tables

• III.1. Unemployment Profile

• III.2. Unemployment Characteristics in Selected EU Countries

• III.3 Wage and Price Equation for France

• III.4. Generosity of Unemployment Benefits

• III.5. Replacement Rates for Single-Earner Households, 1994

• III.6. Replacement Rates for Single-Earner Households, 1994

• III.7. Net Monetary Gains from RMI to SMIC for Single Persons

• III.8. Net Monetary Gains from RMI for Single Parents and Couples

• III.9. Proportion of Workers Paid at the SMIC

• III.10. Minimum Wage Systems in Europe

• III.11. Labor Market Policies Since the Early 1980s in Selected Countries

• Figures

• III.1. Comparison of Unemployment Rates in Selected Cities

• III.2. Labor Market Indicators in Selected Industrial Countries in 1997

• III.3. Phillips Curve 1971–97

• III.4. Minimum Wages and Employment in Selected Countries