Labor Disputes and Labor Flows

46 Pages Posted: 9 May 2011

See all articles by Henri Fraisse

Henri Fraisse

Cornell University

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Corinne Prost

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

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.

Keywords: labor judges, labor flows, employment protection legislation, unfair dismissal, France

JEL Classification: J32, J53, J63, K31

Suggested Citation

Fraisse, Henri and Kramarz, Francis and Prost, Corinne, Labor Disputes and Labor Flows. IZA Discussion Paper No. 5677, Available at SSRN: https://ssrn.com/abstract=1835316 or http://dx.doi.org/10.2139/ssrn.1835316

Henri Fraisse (Contact Author)

Cornell University ( email )

Ithaca, NY 14853
United States

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Corinne Prost

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
92245 Malakoff Cedex
France
+33 1 4117 6048 (Phone)
+33 1 4117 3624 (Fax)

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