Firm Size Distortions and the Productivity Distribution : Evidence from France

  title={Firm Size Distortions and the Productivity Distribution : Evidence from France},
  author={Luis Garicano},
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 date 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… CONTINUE READING
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