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Labor Disputes and Job Flows

Author

Listed:
  • Henri Fraisse
  • Francis Kramarz
  • Corinne Prost

Abstract

Using a data set of individual labor disputes brought to French courts over the years 1996 to 2003, the authors use variations in local conditions of the activity of the labor courts to assess the effect of dismissal costs on the labor market. First, the authors present a simple theoretical framework to explain the links between litigation costs, judicial outcomes, and firing costs. Second, they regress job flows on indicators of judicial outcomes, using an instrument, based on local shocks in the supply of lawyers. They find that when the numbers of lawyers increase, workers litigate more often, which should increase the firing costs for the firms. This increased filing rate causes a large decrease in employment fluctuations, especially for shrinking or exiting firms. The total effect on employment growth is slightly positive, and this result is more sensitive to the adopted specification.

Suggested Citation

  • Henri Fraisse & Francis Kramarz & Corinne Prost, 2015. "Labor Disputes and Job Flows," ILR Review, Cornell University, ILR School, vol. 68(5), pages 1043-1077, October.
    • Handle: RePEc:sae:ilrrev:v:68:y:2015:i:5:p:1043-1077
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    Cited by:

    1. Paul Brandily & Camille Hémet & Clément Malgouyres, 2022. "Understanding the Reallocation of Displaced Workers to Firms," Working Papers halshs-03082302, HAL.
    2. Cyprien Batut & Eric Maurin, 2020. "Termination of Employment Contracts by Mutual Consent and Labor Market Fluidity," IAAEU Discussion Papers 202005, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Decio Coviello & Luigi Moretti & Giancarlo Spagnolo & Paola Valbonesi, 2018. "Court Efficiency and Procurement Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(3), pages 826-858, July.
    4. Pierre Cahuc & Stéphane Carcillo & Bérengère Patault & Flavien Moreau, 2024. "Judge Bias in Labor Courts and Firm Performance," Journal of the European Economic Association, European Economic Association, vol. 22(3), pages 1319-1366.
    5. Stefano Dughera & Alessandro Melcarne, 2025. "Judicial enforcement as a worker discipline device," European Journal of Law and Economics, Springer, vol. 60(2), pages 227-247, October.
    6. Batut, Cyprien & Maurin, Eric, 2019. "From Ultima Ratio to Mutual Consent: The Effects of Changing Employment Protection Doctrine," IZA Discussion Papers 12440, IZA Network @ LISER.
    7. Claudine Desrieux & Romain Espinosa, 2017. "Economic analysis of French Labor Courts [Analyse économique des conseils de prud'hommes : Enjeux et Perspectives]," Post-Print halshs-02066317, HAL.
    8. Yannick Gabuthy & Eve-Angéline Lambert, 2025. "Severance payments: main effects and determinants on the labour market," European Journal of Law and Economics, Springer, vol. 60(2), pages 333-363, October.
    9. Cyprien Batut & Eric Maurin, 2019. "Comment les ruptures conventionnelles ont transformé le marché du travail," Working Papers halshs-01983060, HAL.
    10. Claudine Desrieux & Romain Espinosa, 2020. "Scale for capped damages in case of unfair dismissal: some empirical evidence [La Barémisation des indemnités pour licenciement abusif: Quelques Eléments d'Analyse Empirique]," Post-Print halshs-02307212, HAL.
    11. Giuseppina Gianfreda & Giovanna Vallanti, 2020. "Labor Courts and Firing Costs: The Labor‐Market Effects of Trial Delays," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 40-84, January.
    12. Bertoni, Marco & Chinetti, Simone & Nistico, Roberto, 2023. "Employment Protection, Job Insecurity, and Job Mobility," IZA Discussion Papers 16647, IZA Network @ LISER.
    13. Okudaira, Hiroko, 2018. "The economic costs of court decisions concerning dismissals in Japan: Identification by judge transfers," International Review of Law and Economics, Elsevier, vol. 53(C), pages 60-75.
    14. Espinosa, Romain & Desrieux, Claudine & Ferracci, Marc, 2018. "Labor market and access to justice," International Review of Law and Economics, Elsevier, vol. 54(C), pages 1-16.
    15. Camille Signoretto & Julie Valentin, 2019. "Individual dismissals for personal and economic reasons in French firms: One or two models?," European Journal of Law and Economics, Springer, vol. 48(2), pages 241-265, October.

    More about this item

    Keywords

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    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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