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I am currently readings Piketty's "The Economics of Inequality", where he states in chapter 3:

The P90/P10 wage ratio in the United States in the 1990s is 4.5, whereas it is “only” 3.2 in France (Table 1.7). From this one might deduce that in order to create as many jobs in France as in the United States, and in particular in order to stop the labor share of value added from decreasing further in France, one ought to increase the C90/C10 ratio between the 90th and 10th percentiles of wages plus social charges in France by about 40 percent, which would mean eliminating all employer-paid social charges on low wages and reassigning them to high wages.

I am aware of what the P90/P10 ratio is, but I have never heard of a C90/C10 ratio. The term is mentioned again several times in the following paragraphs, but receives no further explanation in the remainder of the book. An online search for an explanation did not return any results for me, so I am hoping someone here will be able to help me out.

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My understanding is that Piketty uses the term "P90/P10" only to measure wage inequality and the term "C90/C10" for wages plus social charges. The underlying distributions are different, but they both measure the ratio of the 90th percentile to the 10th percentile.

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  • $\begingroup$ Thanks for the quick answer, this makes sense to me! Now back to reading... $\endgroup$ – RollingCompass Mar 19 at 11:28

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