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Judge Bias in Labor Courts and Firm Performance

Author

Listed:
  • Cahuc, Pierre

    (Sciences Po, Paris)

  • Carcillo, Stéphane

    (OECD)

  • Patault, Bérengère

    (CREST (ENSAE))

  • Moreau, Flavien

    (International Monetary Fund)

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.

Suggested Citation

  • Cahuc, Pierre & Carcillo, Stéphane & Patault, Bérengère & Moreau, Flavien, 2020. "Judge Bias in Labor Courts and Firm Performance," IZA Discussion Papers 13794, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13794
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    More about this item

    Keywords

    firm survival; judge bias; dismissal compensation; employment;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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