Judge Bias in Labor Courts and Firm Performance

73 Pages Posted: 3 Nov 2020 Last revised: 4 Feb 2022

See all articles by Pierre Cahuc

Pierre Cahuc

Ecole Polytechnique, Paris

Stéphane Carcillo

Organisation for Economic Co-operation and Development (OECD); Sciences Po; IZA

Flavien Moreau

International Monetary Fund (IMF)

Berengere Patault

University of Amsterdam

Date Written: October 2020

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.

Keywords: employment, Employment protection legislation, Labor courts

JEL Classification: J01, J08, K31

Suggested Citation

Cahuc, Pierre and Carcillo, Stephane and Moreau, Flavien and Patault, Berengere, Judge Bias in Labor Courts and Firm Performance (October 2020). CEPR Discussion Paper No. DP15399, Available at SSRN: https://ssrn.com/abstract=3723591

Pierre Cahuc (Contact Author)

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Stephane Carcillo

Organisation for Economic Co-operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Sciences Po ( email )

28 rue des Saints peres
Paris, 75007
France

IZA ( email )

Flavien Moreau

International Monetary Fund (IMF) ( email )

Kuwait

Berengere Patault

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

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