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Judge Bias in Labor Courts and Firm Performance

Author

Listed:
  • Pierre Cahuc

    (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, CEPR - Center for Economic Policy Research)

  • Stéphane Carcillo

    (OCDE / OECD - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Bérengère Patault

    (UvA - Universiteit van Amsterdam = University of Amsterdam)

  • Flavien Moreau

    (International Monetary Fund (IMF))

Abstract

This paper documents the existence of judge-specific differences on granting compensation for wrongful dismissal and shows that their consequences are different for small low-performing firms than for other firms. Pro-worker judge bias reduces job creation for all firms, increases the destruction of permanent jobs in small and low-performing firms but reduces it in large high-performing firms. Pro-worker bias reduces employment and survival for small and low-performing firms but has no significant effects on these outcomes for the other firms. The probability that permanent incumbent workers keep their job in firms judged by a pro-worker judge increases in large and high-performing firms, while it decreases in small, poorly performing firms.

Suggested Citation

  • Pierre Cahuc & Stéphane Carcillo & Bérengère Patault & Flavien Moreau, 2024. "Judge Bias in Labor Courts and Firm Performance," Sciences Po Economics Publications (main) hal-05446842, HAL.
    • Handle: RePEc:hal:spmain:hal-05446842
    DOI: 10.1093/jeea/jvad046
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-05446842v1
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