INSEE’s latest report has revealed a rise in French household incomes, with significant growth in asset-based wealth. However, France still trails behind the U.S. in disposable income, despite strong European comparisons.

On 17th October, the National Institute of Statistics and Economic Studies (INSEE) published the 2024 edition of its Household Income and Wealth report (Les revenus et le patrimoine des ménages), revealing new insights into what French households earn, own, and how their incomes compare internationally. The report covers everything from social contributions to high incomes, shedding light on the financial landscape of the country.

In 2023, the average income per capita in France experienced a significant rise, partly driven by wage increases, but inflation dampened the real purchasing power of households. Despite these gains, France still lags behind the United States in terms of disposable income, although it compares favourably with its European neighbours.

Household earnings and wealth in France

According to the report, the gross disposable income (RDB) of French households rose by 8% in 2023, reaching €1,774 billion. This marked a significant jump from the 5.2% growth in 2022. Salaries, which represent a significant portion of household income, increased by 5.3%, reaching a total of €1,480 billion. The rise in the minimum wage (Smic) of 5.4% played a pivotal role in this, alongside a 2.4% increase in public sector wages.

Income from entrepreneurial activities also saw growth, rising by 4.2% in 2023. Meanwhile, income from property and financial investments surged by a remarkable 17.4%, jumping to €398.5 billion. This was fuelled by the rising interest rates, which benefitted households with significant bank deposits and financial assets . However, while these figures represent substantial growth, the high inflation rate of 7.1% limited the overall impact on real purchasing power, which only grew by 0.8%.

International comparison of incomes

In 2022, France’s disposable income per capita stood at €37,300 when adjusted for purchasing power parity (PPP), placing it second among major Western European countries. Germany topped the list with a per capita income of €42,100, while Italy and Spain lagged behind at €34,600 and €28,700, respectively .

The contrast becomes starker when comparing France with the United States. American households enjoyed a disposable income per capita of €58,200, a substantial 56% higher than in France. When adjusted for public services like education and healthcare, which are more heavily subsidised in Europe, this gap narrows slightly, with the adjusted income in the U.S. still 36% higher than that of France.

The disparity in income between the U.S. and European countries is also evident over time. Between 2007 and 2022, the purchasing power of French households grew by 11%, while U.S. households saw a much larger increase of 21%. However, France’s social welfare measures, such as energy price caps and fuel subsidies, helped limit the impact of inflation in 2022, supporting household purchasing power during tough economic times.

The role of social contributions

Social contributions remain a significant part of the French system, redistributing wealth and supporting lower-income households. Remarkably, in 2021, 44% of households in mainland France received some form of non-contributive social benefit. These include family benefits, housing aid, and minimum income support. For the lowest-income households, social transfers account for nearly half of their total income.

France’s top earners

INSEE’s report also shed light on the very top earners in France. In 2021, individuals in the top 1% had an annual income of over €121,370 before redistribution, significantly more than the median income of €24,800. This group is heavily concentrated in Paris and the Hauts-de-Seine region, with 86% owning their homes. While high-income households benefit substantially from investment income, their overall tax burden is also greater, significantly contributing to France’s progressive income redistribution model.

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