Why does France have so many 49-employee companies?

France has 2.4 times as many companies with 49 employees as with 50. Under French labour law, once a company has at least 50 employees, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons. The 3,200 page Code du Travail dictates everything from job classifications to the ability to fire workers.

Worker Productivity: The French Connection

It is unlawful in France to lay workers off to improve the profitability of the company. Michelin laid 451 workers off in 1999, announced an increased profit 2 months soon after. It was successfully sued for €10 million in the Labour Court on the grounds that economic layoffs are justified to preserve the competitiveness of a firm or of the group to which it belongs, but not in order to improve it.

Participants in the French version of the television show Survivors sued the producers for redundancy pay when they were voted off the show by the tribal council.

When entrepreneurs  and managers are confronted with laws that introduces a cost of acquiring a size that is beyond a certain threshold such as 49 employees, some will choose to stay below the threshold and stay at an inefficiently small size. The more talented managers are not running the larger firms because of this barrier to growth.

In Firm Size Distortions and the Productivity Distribution: Evidence from France, Luis Garicano, Claire LeLarge, and John Van Reenen found that the cost of the French labour regulations is approximately equivalent to a 5-10% increase in wages. The main losers from the French regulation from this misallocation of managerial talent are workers (and to a lesser extent large firms) and the main winners are small firms.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

New Historical Express

(Formerly Hatful of History)

Economics in the Rear-View Mirror

Archival Artifacts from the History of Economics

CAMERA UK

COMMITTEE FOR ACCURACY IN MIDDLE EAST REPORTING AND ANALYSIS

Truth on the Market

Scholarly commentary on law, economics, and more

Stockerblog

Philosophy, Politics, Culture from Barry Stocker, British philosopher based in Istanbul

Organizations and Markets

Economics of organizations, strategy, entrepreneurship, innovation, and more

John Quiggin

Commentary on Australian and world events from a socialist and democratic viewpoint

The Antiplanner

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Pedestrian Observations

For Walkability and Good Transit, and Against Boondoggles and Pollution

Manhattan Contrarian

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Bet On It

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Trade Diversion

Commentary on development, globalization, and trade by Jonathan Dingel.

Movie Nation

Roger Moore's film criticism, against the grain since 1984.

Conversable Economist

In Hume’s spirit, I will attempt to serve as an ambassador from my world of economics, and help in “finding topics of conversation fit for the entertainment of rational creatures.”

AwayPoint

Between An Island of Certainties and the Unknown Shore

Why Evolution Is True

Why Evolution is True is a blog written by Jerry Coyne, centered on evolution and biology but also dealing with diverse topics like politics, culture, and cats.

Weapons and Warfare

History and Hardware of Warfare

fportier.wordpress.com/

Franck Portier's professional page

NZCPR Site

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Breaking Views

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Anti-Dismal

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Peter Winsley

Economics, and such stuff as dreams are made on

Bowalley Road

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

History of Sorts

WORLD WAR 2,EIGHTIES,MUSIC,HISTORY,HOLOCAUST

Tudor Chronicles

News, reviews and talk all about the Tudors

Karl du Fresne

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Roger Pielke Jr.

an undisciplined academic - @RogerPielkeJr on Twitter

Great Books Guy

Reading The Classics

@STILLTish. Gender Abolition

Examining Gender Identity ideology and its impact on Women's Sex based rights and Gay Rights. Exploring how this has taken such firm root in Western societies (Cognitive & Regulatory Capture).

200-Proof Liberals

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

What Paul Gregory is Writing About

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Adventures of a Tudor Nerd

Exploring the 16th Century and Beyond

Conversable Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Barrie Saunders

Thoughts on public policy and the media

The Victorian Commons

Researching the House of Commons, 1832-1868

Coyote Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

The History of Parliament

Blogging on parliament, politics and people, from the History of Parliament

Books & Boots

reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

%d bloggers like this: