1) The document summarizes the backcasting of national accounts data in France from 1949-2007 using the base year 2000. It involved computing supply and use tables for products and distributing totals for production, income, and employment across sectors. 2) Two notable trends emerged from the distribution of value-added among non-financial corporations: volatility was higher in France than the US, and France's labor share did not recover from the 1970s oil shock as quickly. 3) The backcasting assumptions around taxes, sole proprietorships, and financial intermediation services could significantly impact the distribution of value-added over the long term. Transparency is important for credibility.

1. The distribution of value-added in France 1949-2007
A backcasting example in base 2000
Pierre-Alain Pionnier
INSEE
October 16th, 2008

2. National accounts data now available at INSEE
› May 2005 : National accounts in base 2000. Publication of
input-output tables and sector accounts since 1978 and
employment data since 1990.
› May 2007 : Publication of input-output tables and sector
accounts since 1959 (with revision of the period
1978-1999).
› May 2008 : Publication of input-output tables, sector
accounts, production accounts / generation of income
accounts by homogeneous branches and employment data
since 1949.
› When will these data (prior to 1970) be available on the
OECD and Eurostat Websites ?
Page 2
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

3. From base 70 to base 2000 : Conceptual innovations
and available data
› 1. base 70 : 1949-1985 › 3. base 95 : 1978-2004
- 1971 : base year - 1995 : base year
- 1959-1970 : 1st backcasting - Integration of a new activity and product
- 1949-1958 : 2nd backcasting, less classification
detailed - Integration of overseas departments to
the national economic territory
› 2. base 80 : 1959-1997 - Transition to the concepts and
- 1977-1982 : base years classifications of SNA 93
- 1970-1976 : 1st backcasting
- 1959-1969 : 2nd backcasting, less › 4. base 2000 :
detailed
- 2000 : base year
- Allocation of FISIM, new treatment of
-> Same classifications, homogeneous social services, important revisions of
concepts (SNA 68, ESA 70) trade margins…
-> Same classifications, homogeneous
Page 3 concepts (SNA 93, ESA 95)
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

4. The backcasting of national accounts in base 2000
› Annual backcasting based on data converted to classifications and
concepts of base 2000 : no interpolation or direct reference to previous
base years.
› Successive steps : computation of supply and use equilibriums for 40
products (16 products from 1949 to 1958) ; breakdown of total production
and intermediate consumption between sectors ; distribution of income.
› Specific issues that may have an impact on the distribution of VA :
- Distinction between non-financial corporations and sole proprietorships
- Allocation of FISIM ;
- Computation of taxes on products except VAT and import taxes (D214),
subsidies on products (D31) : in order to convert producer prices
(previously used for the valuation of production and VA) into basic
prices (actually used for the valuation of production and VA).
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Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

5. Distribution of value-added for non-financial
corporations : France / USA
80%
75%
70%
65%
60%
55%
1961
1969
1949
1957
1977
1985
1993
1997
2001
1953
1965
1973
1981
1989
2005
France (non-financial corporations) United States (non-financial domestic corporate business sector)
Two important stylized facts :
- The distribution of VA is more volatile in the medium/long term in France
than in the USA ;
- The labour share in France never recovered the level prevailing before
the 1st oil-shock, contrary to the labour share in the USA.
Page 5 -> To which extent do they depend on backcasting assumptions ?
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

6. Distinction between non-financial corporations
(NFCs) and sole proprietorships (SPs)
Distinction to make Distinction to make
No distinction to make
above GOS above VA
1956 1970 2007
Share of SPs in the VA of SPs+NFCs Two alternative methods to neutralize the
and share of NS workers in total employment growing proportion of wage-earners
50% 80%
45% 75%
40% 70%
35% 65%
30% 60%
25% 55%
20%
50%
45%
15%
40%
10%
1997
1965
1961
1963
1967
1969
1971
1973
1975
1977
1979
1981
1991
1995
1959
1983
1985
1987
1989
1993
1967
1949
1951
1953
1955
1957
1959
1961
1963
1965
1969
1971
1973
1975
1979
1981
1977
1983
Share of SPs in the VA of NFCs + SPs (observed) Labour share in the value-added of NFCs + SPs (at basic prices, except FISIM) without wage imputation to
Share of SPs in the VA of NFCs + SPs (obtained by regression) non salaried workers
Share of non salaried workers in total employment Labour share in the value-added of NFCs + SPs (at basic prices, except FISIM) with wage imputation to non
salaried workers
Labour share in the value-added of NFCs (at basic prices, except FISIM)
Page 6
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

7. Allocation of FISIM and distribution of value-added
› After 1977 : Amounts of credits and deposits available for each sector
-> direct computation of FISIM.
For each sector, for credits and for deposits, estimation of regressions between
the share of the sector in the global amount of FISIM and the reference rate on
the monetary market (RRMM).
› 1949-1976 : These regressions based on RRMM are used to allocate the global
amount of FISIM between sectors.
76%
74%
72%
70%
68%
Impact of the allocation of FISIM 66%
64%
on the distribution of VA (S11)
62%
60%
58%
56%
1961
1969
1949
1973
1985
1997
1953
1957
1965
1977
1981
1989
1993
2001
2005
Page 7 Labour share in value-added except FISIM Labour share in value-added including FISIM
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

8. Impact of the valuation of value-added on its distribution
75%
1969 : for many corporations, VAT substitutes to a tax on wages
73%
(classified in taxes on production, D29)
71%
69%
67%
65%
63%
61%
59%
1968 : VAT substitutes to other taxes
57% on products (classified in D214)
55%
1965
1997
1959
1961
1967
1969
1971
1973
1975
1977
1981
1983
1985
1987
1989
1991
1993
1995
1963
1979
Labour share in VA at producer prices (except FISIM)
Labour share in VA at basic prices (except FISIM)
Labour share in VA at factor cost (except FISIM)
Page 8
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

9. Producer prices and basic prices : reconstitution of
long time series of taxes and subsidies
P1PP ( producer prices ) = P1 ( basic prices ) + D214 - D31
14 3
24
>0
⇒ VAPP = VA + D214 - D31
14 3
24
>0
Share of D214 in the VA of S11 Share of D31 in the VA of S11
16% 4,0%
14% 3,5%
12% 3,0%
10% 2,5%
8% 2,0%
6% 1,5%
4% 1,0%
2% 0,5%
0% 0,0%
1965
1979
1989
1949
1951
1953
1955
1957
1961
1969
1973
1975
1977
1981
1983
1985
1987
1991
1963
1979
1959
1963
1967
1971
1955
1957
1959
1961
1965
1967
1985
1987
1989
1991
1949
1951
1953
1969
1971
1973
1975
1977
1981
1983
Base 70 Base 80 Base 70 Base 80
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Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

10. Uncertainty on the evolution of taxes and subsidies
-> Error margin on the distribution of VA
Distribution of VA at basic prices : Distribution of VA at factor cost :
discrepancies between b. 70 and 80 (1959-1969) error margin in base 2000
74% 78%
72%
76%
70%
68% 74%
66%
72%
64%
62% 70%
60%
1961
1969
1949
1953
1957
1977
1985
1993
2001
1965
1973
1981
1989
1997
2005 68%
Labour share in VA (at basic prices, except FISIM) in base 2000 (obtained by following the evolution of the
ratio (D214-D31) / VA from 1959 until 1969 in base 80) 66%
Labour share in VA (at basic prices, except FISIM) in base 2000 (obtained by following the evolution of the
ratio (D214-D31) / VA from 1959 until 1969 in base 70)
Base 80 64%
1957
1973
1949
1969
1977
1953
1961
1965
1981
1985
1989
1993
1997
2001
2005
Base 70
Page 10
Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008

11. Conclusion
› We hope that this backcasting exercise will be used as
a starting point for future backcastings in France.
› Details and technical issues (reclassifications of
taxes…) may have a big impact on the overall
macroeconomic picture.
› Transparency is essential to the credibility of
backcasted national accounts and may help to
improve the work from one benchmark to another.
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Pierre-Alain Pionnier The distribution of VA in France 1949-2007 October 16th, 2008