Judge Bias in Labor Courts and Firm Performance

Author/Editor:

Pierre Cahuc ; Stéphane Carcillo ; Berengere Patault ; Flavien Moreau

Publication Date:

February 12, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

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.

Series:

Working Paper No. 2021/031

Frequency:

regular

English

Publication Date:

February 12, 2021

ISBN/ISSN:

9781513569383/1018-5941

Stock No:

WPIEA2021031

Format:

Paper

Pages:

72

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