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Labor Disputes and Labor Flows

Author

Listed:
  • Fraisse, Henri

    (Bank of France)

  • Kramarz, Francis

    (CREST (ENSAE))

  • Prost, Corinne

    (CREST-INSEE)

Abstract

About one in four workers challenges her dismissal in front of a labor court in France. Using a data set of individual labor disputes brought to French courts over the years 1996 to 2003, we examine the impact of labor court activity on labor market flows. First, we present a simple theoretical model showing the links between judicial costs and judicial case outcomes. Second, we exploit our model as well as the French institutional setting to generate instruments for these endogenous outcomes. In particular, we use shocks in the supply of lawyers who resettle close to their university of origin. Using these instruments, we show that labor court decisions have a causal effect on labor flows. More trials and more cases won by the workers cause more job destructions. More settlements, higher filing rates, and a larger fraction of workers represented by a lawyer dampen job destructions. Various robustness checks confirm these findings.

Suggested Citation

  • Fraisse, Henri & Kramarz, Francis & Prost, Corinne, 2011. "Labor Disputes and Labor Flows," IZA Discussion Papers 5677, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5677
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    References listed on IDEAS

    as
    1. Stähler, Nikolai, 2008. "Firing costs, severance payments, judicial mistakes and unemployment," Labour Economics, Elsevier, vol. 15(6), pages 1162-1178, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Laura Khoury, 2021. "Unemployment Benefits and the Timing of Redundancies," Working Papers halshs-02057145, HAL.
    2. repec:ilo:ilowps:481497 is not listed on IDEAS
    3. 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.
    4. Fredrik Heyman & Per Skedinger, 2016. "Employment Protection Reform, Enforcement in Collective Agreements and Worker Flows," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(4), pages 662-704, October.
    5. Laura Khoury, 2019. "Unemployment Benefits and the Timing of Redundancies: Evidence from Bunching," PSE Working Papers halshs-02057145, HAL.
    6. Le Barbanchon, Thomas. & Malherbet, Franck., 2013. "An anatomy of the French labour market : country case studies on labour market segmentation," ILO Working Papers 994814973402676, International Labour Organization.

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    More about this item

    Keywords

    employment protection legislation; labor flows; labor judges; unfair dismissal; France;
    All these keywords.

    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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