[The "judicial risk" and lay-offs in France from the point of view of the economics of uncertainty]">

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Le "risque judiciaire" et les licenciements en France: le point de vue de l'économie du risque
[The "judicial risk" and lay-offs in France from the point of view of the economics of uncertainty]

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Author Info
Langlais, Eric

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Abstract

Does dismissal law create a "judicial risk" to which french firms are exposed? The paper discusses the different arguments (Blanchard and Tirole (2003), Cahuc and Kramarz (2004), Munoz-Perez and Serverin (2005)) using the empirical available evidence together with basic tools in economics of uncertainty. We show that data on jugement appeals in front of Prud'Hommes suggest that employees exhibit a less risk averse attitude (and to the limit, they behave in fact in a risk seeking way) than usually observed on markets for risk (such as financial or insurance markets). On the other hand, we show that the motive called in french dismissal law "personal motive" is not perceived as better than the "economic motive" soon as firms are supposed to behave in a risk averse way. Conversally, when we compare the expected cost of a dismissal associated to each motive, we find that the result of the comparison is very sensible to the employee' seniority, to the rejection rate of employees' demand in front of the Prud'Hommes, and/or to the indirect cost of the dismissal.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8845.

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Date of creation: Mar 2008
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Handle: RePEc:pra:mprapa:8845

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Related research
Keywords: dismissal law Prud'Hommes judicial risk

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Find related papers by JEL classification:
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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  1. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
  2. Kramarz, Francis & Michaud, Marie-Laure, 2004. "The Shape of Hiring and Separation Costs," IZA Discussion Papers 1170, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Abowd, John M. & Kramarz, Francis, 2003. "The costs of hiring and separations," Labour Economics, Elsevier, vol. 10(5), pages 499-530, October. [Downloadable!] (restricted)
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  4. Farmer, Amy & Pecorino, Paul, 1994. "Pretrial negotiations with asymmetric information on risk preferences," International Review of Law and Economics, Elsevier, vol. 14(3), pages 273-281, September. [Downloadable!] (restricted)
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