ABSTRACT
Since the 80´s and 90´s, the French economy has shown high unemployment rates and a high share of atypical employment. However, comparing with other advanced economies, France has been able to manage to keep low levels of income inequality. According to my view, this apparent paradox is strongly linked to the high levels of social spending in France. Although it is often argued that the liberalization process implied a Welfare State retrenchment, here I argue that, in the French case, welfare politics played a crucial role to legitimate and stabilize a more liberal labour market and industrial relations regime. While the main building blocks of the post-war model (collective bargaining, state intervention in the economy, full employment and full-time permanent jobs) were vanishing, successive French governments increased the number of income-tested social transfers. As a result, a dual model has emerged. On the one hand, those who are still employed in jobs under post-war institutional arrangements; on the other hand, workers with new precarious jobs, increasingly dependent on income transfers from the state. Although this model guarantee low levels of income inequality, it is also a source of social and political conflicts.
