An Evaluation of the French Tax Reduction for In-Home Services

This paper aims at evaluating the effect of the 1991 French tax reduction on the use of in-home services. The motivation of this study is to determine whether the redistribution it generates in favour of the wealthiest is counterbalanced by an incentive to use more services for less well-off households and then, by low-skilled job creations. We implement a method which combines matching and difference-in-difference estimators. Our results suggest that the tax reduction had a significant effect (between 1.3 and 4.9 points) on the propensity to consume of the 40 % households whose standard of living is intermediate.