Judge Bias in Labor Courts and Firm Performance

Pierre Cahuc, Stéphane Carcillo (), Bérangère Patault () and Flavien Moreau
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Stéphane Carcillo: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics
Bérangère Patault: UvA - University of Amsterdam [Amsterdam] = Universiteit van Amsterdam

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Abstract: Does judge subjectivity in labor courts influence firm performance? We study the economic consequences of judge decisions by collecting information on 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, defined as judge-specific differences on granting compensation for wrongful dismissal, has statistically significant effects on the survival and employment of small firms, especially among very small and low-performing ones. When compensation for wrongful dismissal is instrumented by judge bias, an increase in compensation of 1 percent of the payroll reduces employment growth by 5 percentage points after 3 years for those firms.

Keywords: Dismissal compensation; Judge bias; Firm survival; Employment (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-bec, nep-law and nep-sbm
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03881619v1
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Judge Bias in Labor Courts and Firm Performance (2024)
Working Paper: Judge Bias in Labor Courts and Firm Performance (2022)
Working Paper: Judge Bias in Labor Courts and Firm Performance (2022)
Working Paper: Judge Bias in Labor Courts and Firm Performance (2021)
Working Paper: Judge Bias in Labor Courts and Firm Performance (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-03881619

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