Replication data for: Firm Size Distortions and the Productivity Distribution: Evidence from France

Summary:  View help for Summary We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where many labor laws start to bind on firms with 50 or more employees. Using population data on firms between 1995 and 2007, we structurally estimate the key parameters of our model to construct counterfactual size, productivity, and welfare distributions. We find that the cost of these regulations is equivalent to that of a 2.3 percent variable tax on labor. In our baseline case with French levels of partial real wage inflexibility, welfare costs of the regulations are 3.4 percent of GDP (falling to 1.3 percent if real wages were perfectly flexible downward). The main losers from the regulation are workers--and to a lesser extent, large firms--and the main winners are small firms.

JEL Classification:  View help for JEL Classification
      D22 Firm Behavior: Empirical Analysis
      D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
      J08 Labor Economics Policies
      J31 Wage Level and Structure; Wage Differentials
      K31 Labor Law
      L25 Firm Performance: Size, Diversification, and Scope