Working Paper: CEPR ID: DP15399
Authors: Pierre Cahuc; Stéphane Carcillo; Brengre Patault; Flavien Moreau
Abstract: Does labor court uncertainty and judge subjectivity influence firms performance? We study the economic consequences of judge decisions by collecting information on more than 145,000 Appeal court rulings, combined with administrative firm-level records covering the whole universe of French firms. The quasi-random assignment of judges to cases reveals that judge bias has statistically significant effects on the survival, employment, and sales of small low-performing firms. However, we find that the uncertainty associated with the actual dispersion of judge bias is small and has a non-significant impact on their average outcomes.
Keywords: Labor courts; Employment protection legislation; Employment
JEL Codes: J01; J08; K31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| judge bias (K40) | survival (C41) |
| judge bias (K40) | employment growth (O49) |
| judge bias (K40) | sales (M31) |
| compensation for wrongful dismissal (J65) | employment growth (O49) |
| compensation for wrongful dismissal (J65) | survival (C41) |
| judge bias (K40) | compensation for wrongful dismissal (J65) |
| uncertainty associated with judge bias (D81) | average outcomes for firms (L25) |