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Judge Bias in Labor Courts and Firm Performance

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  • Mr. Pierre Cahuc
  • Stéphane Carcillo

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

  • Mr. Pierre Cahuc & Stéphane Carcillo, 2021. "Judge Bias in Labor Courts and Firm Performance," IMF Working Papers 2021/031, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2021/031
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    More about this item

    Keywords

    Dismissal compensation; judge bias; firm survival; WP; pro-worker bias; appeal court rulings database; firm's employment; judge level;
    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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