Wednesday, May 17th, 2017 12:45 pm

France’s Labor Market

Question A: Revising France’s labor market policies — by reducing employment protection, decentralizing labor negotiations to the firm level, and making training programs more accessible and responsive to labor demands — would, all else equal, increase productivity in France’s economy.

Responses
 

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Responses weighted by each expert's confidence

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Question B: Reducing employment protection would reduce the equilibrium unemployment rate in France.

Responses
 

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Responses weighted by each expert's confidence

Source: European IGM Economic Experts Panel
www.igmchicago.org/european-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Aghion Philippe Aghion Harvard Did Not Answer
Bio/Vote History
         
Allen Franklin Allen Imperial College London Agree 7
Giving flexibility should improve things in the long run. The short run effects may be more problematic if there is a lot of dissent,
Bio/Vote History
         
Antras Pol Antras Harvard Agree 7
Bio/Vote History
         
Baldwin Richard Baldwin The Graduate Institute Geneva Did Not Answer
Bio/Vote History
         
Besley Timothy J. Besley LSE Agree 6
Bio/Vote History
         
Blanchard Olivier Blanchard Peterson Institute Agree 7
those reforms are the right ones and should be implemented. Based on past empirical evidence, they should work. But one can never be sure.
Bio/Vote History
         
Bloom Nicholas Bloom Stanford Strongly Agree 8
France is death by red tape - what the US could become with 20 more years of creep of regulations and occupational licensing
Bio/Vote History
         
Blundell Richard William Blundell University College London Agree 8
Increasing productivity has been a particularly difficult nut to crack, and not just in France. Some careful deregulation is a key part.
Bio/Vote History
         
Bénassy-Quéré Agnès Bénassy-Quéré Paris School of Economics Strongly Agree 10
The extensive margin of productivity growth is relatively poor in France + the training system is very unequal, both for youth and adults.
Bio/Vote History
         
Carletti Elena Carletti Bocconi No Opinion
Bio/Vote History
         
Danthine Jean-Pierre Danthine Paris School of Economics Strongly Agree 10
Bio/Vote History
         
De Grauwe Paul De Grauwe LSE Did Not Answer
Bio/Vote History
         
Eeckhout Jan Eeckhout University College London Agree 7
Bio/Vote History
         
Fehr Ernst Fehr Universität Zurich Did Not Answer
Bio/Vote History
         
Freixas Xavier Freixas Universitat Pompeu Fabra Did Not Answer
Bio/Vote History
         
Fuchs-Schündeln Nicola Fuchs-Schündeln Goethe-Universität Frankfurt Agree 8
Bio/Vote History
         
Galí Jordi Galí Universitat Pompeu Fabra Agree 8
Bio/Vote History
         
Garicano Luis Garicano LSE Strongly Agree 8
My own research (with Van Reenen and Lelarge) shows size dependent labour regulations make it hard for productive firms to grow
-see background information here
Bio/Vote History
         
Giavazzi Francesco Giavazzi Bocconi Strongly Agree 8
The positive experience of the Italian jobs Act
Bio/Vote History
         
Griffith Rachel Griffith University of Manchester Agree 9
Bio/Vote History
         
Guerrieri Veronica Guerrieri Chicago Booth Strongly Agree 9
Bio/Vote History
         
Guiso Luigi Guiso Einaudi Institute for Economics and Finance Agree 5
there is poor shared consensus in France to labor market liberalization anoductivity negatively
Bio/Vote History
         
Hellwig Martin Hellwig Max Planck Institute for Research on Collective Goods Did Not Answer
Bio/Vote History
         
Honohan Patrick Honohan Trinity College Dublin Uncertain 5
This is a conplex political economy issue. If done well, could increase employment and TFP in long run; short-run cloudy.
Bio/Vote History
         
Kleven Henrik Kleven Princeton Did Not Answer
Bio/Vote History
         
Krahnen Jan Pieter Krahnen Goethe University Frankfurt Uncertain 5
The second policy option in the list (decentralized labor negotiations) may backfire, boosting strike incentives and lowering productivity.
Bio/Vote History
         
Krusell Per Krusell Stockholm University Agree 8
Managing training programs is not necessarily so easy but I take the view that significant improvement is feasible.
Bio/Vote History
         
Kőszegi Botond Kőszegi Central European University Agree 7
Bio/Vote History
         
La Ferrara Eliana La Ferrara Bocconi Agree 5
Bio/Vote History
         
Leuz Christian Leuz Chicago Booth Uncertain 3
Unclear as UE protection can also spur firm-specific invt & more lab flex brings in less prod wrkrs; FR prod already among highest in world
Bio/Vote History
         
Meghir Costas Meghir Yale Did Not Answer
Bio/Vote History
         
Neary Peter Neary Oxford Agree 4
"All else equal" agreed. But it risks triggering further disillusionment with globalization. Accompanying macro stimulus would ease the pain
Bio/Vote History
         
O'Rourke Kevin O'Rourke Oxford No Opinion
This is a very odd question, given that French labour productivity is so high.
Bio/Vote History
         
Pagano Marco Pagano Università di Napoli Federico II Strongly Agree 9
Theory & evidence broadly support these predictions. BUT it is key that reforms are not done so as to reinforce a dualistic labor market.
-see background information here
-see background information here
-see background information here
Bio/Vote History
         
Pastor Lubos Pastor Chicago Booth Uncertain 5
Unclear. If such reforms create jobs mostly for people with below-average productivity, aggregate productivity will go down.
Bio/Vote History
         
Persson Torsten Persson Stockholm University Agree 5
Bio/Vote History
         
Pissarides Christopher Pissarides LSE Agree 2
The reforms listed help but they are not the only factors influencing productivity
Bio/Vote History
         
Portes Richard Portes London Business School Strongly Agree 8
Look at Germanyand Sweden. Rigid contracts with high termination costs, as in France, just result in high youth unemployment, precariousness
Bio/Vote History
         
Prendergast Canice Prendergast Chicago Booth Agree 8
Bio/Vote History
         
Reichlin Lucrezia Reichlin London Business School Disagree 5
Bio/Vote History
         
Repullo Rafael Repullo CEMFI Strongly Agree 7
Bio/Vote History
         
Rey Hélène Rey London Business School Agree 7
Flex -security (scandinavian model) would raise productivity. Certainly not the same as decreasing employment protection.
Bio/Vote History
         
Schoar Antoinette Schoar MIT Agree 8
Bio/Vote History
         
Van Reenen John Van Reenen MIT Agree 7
My 2016 AER piece shows a French GDP loss of about 3.4% due to heavy labor regulation for firms over 50 employees
-see background information here
-see background information here
Bio/Vote History
         
Vickers John Vickers Oxford Agree 3
Bio/Vote History
         
Voth Hans-Joachim Voth University of Zurich Uncertain 10
Longer-term contracts can be a good thing for prouctivity, if firms and workers invest in the "match"...
Bio/Vote History
         
Weder di Mauro Beatrice Weder di Mauro Gutenberg University Mainz and INSEAD Agree 5
Bio/Vote History
         
Whelan Karl Whelan University College Dublin Agree 4
Probably not a big effect. Would also bring some relatively lower productivity workers into employment This would lower average productivity
Bio/Vote History
         
Wyplosz Charles Wyplosz The Graduate Institute Geneva Disagree 8
So far high direct and indirect labor costs have forced firms to achieve very high labor productivity through saving on employment.
Bio/Vote History
         
Zilibotti Fabrizio Zilibotti Universität Zurich Strongly Agree 9
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Aghion Philippe Aghion Harvard Did Not Answer
Bio/Vote History
         
Allen Franklin Allen Imperial College London Agree 7
This seems to have been the case in other countries. The unions response may lead to a different outcome in the case of France.
Bio/Vote History
         
Antras Pol Antras Harvard Agree 8
Given the current environment it seems extremely likely that the impact on job creation would far outweigh the lower cost of job destruction
Bio/Vote History
         
Baldwin Richard Baldwin The Graduate Institute Geneva Did Not Answer
Bio/Vote History
         
Besley Timothy J. Besley LSE Agree 6
Bio/Vote History
         
Blanchard Olivier Blanchard Peterson Institute Uncertain 9
Such a reform changes the nature of unemployment (shorter duration, higher flows) for the better. Net effect on the rate is ambiguous.
Bio/Vote History
         
Bloom Nicholas Bloom Stanford Agree 8
Bio/Vote History
         
Blundell Richard William Blundell University College London Agree 8
The key is a balance of both human capital and employment. Youth unemployment is a major issue. The redesign of emp p is central to this.
Bio/Vote History
         
Bénassy-Quéré Agnès Bénassy-Quéré Paris School of Economics Uncertain 5
It would reduce employment inequalities but maybe not the aggregate unemployment rate which depends also on a better matching process.
Bio/Vote History
         
Carletti Elena Carletti Bocconi No Opinion
Bio/Vote History
         
Danthine Jean-Pierre Danthine Paris School of Economics Strongly Agree 9
Bio/Vote History
         
De Grauwe Paul De Grauwe LSE Did Not Answer
Bio/Vote History
         
Eeckhout Jan Eeckhout University College London Agree 6
More than reducing the unemployment rate, it would lead to a huge reduction in unemployment duration.
Bio/Vote History
         
Fehr Ernst Fehr Universität Zurich Did Not Answer
Bio/Vote History
         
Freixas Xavier Freixas Universitat Pompeu Fabra Did Not Answer
Bio/Vote History
         
Fuchs-Schündeln Nicola Fuchs-Schündeln Goethe-Universität Frankfurt Agree 8
Bio/Vote History
         
Galí Jordi Galí Universitat Pompeu Fabra Uncertain 7
It is likely to increase employment volatility (bad, it may improve efficiency (good), but the effect on the unemployment rate is unclear.
Bio/Vote History
         
Garicano Luis Garicano LSE Agree 9
Again see our research and our summary of other´s work
-see background information here
Bio/Vote History
         
Giavazzi Francesco Giavazzi Bocconi Strongly Agree 8
Bio/Vote History
         
Griffith Rachel Griffith University of Manchester Agree 6
Bio/Vote History
         
Guerrieri Veronica Guerrieri Chicago Booth Uncertain 9
Bio/Vote History
         
Guiso Luigi Guiso Einaudi Institute for Economics and Finance Uncertain 9
may be frcitional unemploymnet may be marginally affected in the long run
Bio/Vote History
         
Hellwig Martin Hellwig Max Planck Institute for Research on Collective Goods Did Not Answer
Bio/Vote History
         
Honohan Patrick Honohan Trinity College Dublin Agree 5
A long run equilibrium
Bio/Vote History
         
Kleven Henrik Kleven Princeton Did Not Answer
Bio/Vote History
         
Krahnen Jan Pieter Krahnen Goethe University Frankfurt Agree 6
I only note in passing that the relationship between equilibrium unemployment rate and welfare is likely to be non-monotonic.
Bio/Vote History
         
Krusell Per Krusell Stockholm University Agree 8
It may not do so immediately. One can do a reform with grandfathering though, leaving currently employed workers with protection.
Bio/Vote History
         
Kőszegi Botond Kőszegi Central European University Agree 6
Bio/Vote History
         
La Ferrara Eliana La Ferrara Bocconi Agree 5
Bio/Vote History
         
Leuz Christian Leuz Chicago Booth Uncertain 4
Ambig evidence & theory bc opposite effect on turnover & duration; likely composition effect (CDD to CDI), which could be good for young
Bio/Vote History
         
Meghir Costas Meghir Yale Did Not Answer
Bio/Vote History
         
Neary Peter Neary Oxford Agree 4
All else equal again. And the details matter. Something like Danish "flexicurity" would be good, naive deregulation bad.
Bio/Vote History
         
O'Rourke Kevin O'Rourke Oxford Uncertain 7
Given hysteresis in labour & political markets, SR impacts of such reforms can matter in LR, & depend inter al on accompanying macropolicies
Bio/Vote History
         
Pagano Marco Pagano Università di Napoli Federico II Agree 7
This is likely in the long-run. But in the short run the effect may be the opposite due to job destruction in overmanned firms.
-see background information here
Bio/Vote History
         
Pastor Lubos Pastor Chicago Booth Agree 5
Long-run effects more favorable than short-run.
Bio/Vote History
         
Persson Torsten Persson Stockholm University Agree 5
Bio/Vote History
         
Pissarides Christopher Pissarides LSE Uncertain 1
The policy would increase labor turnover but not necessarily reduce unemployment
Bio/Vote History
         
Portes Richard Portes London Business School Strongly Agree 8
France is textbook 'insider' vs 'outsider' labor market. And we see textbook outcome.
Bio/Vote History
         
Prendergast Canice Prendergast Chicago Booth Uncertain 6
Bio/Vote History
         
Reichlin Lucrezia Reichlin London Business School Disagree 7
Bio/Vote History
         
Repullo Rafael Repullo CEMFI Uncertain 3
Bio/Vote History
         
Rey Hélène Rey London Business School Uncertain 7
Short run effects would depend on when it is implemented. It would increase unemployment in a downturn.
Bio/Vote History
         
Schoar Antoinette Schoar MIT Strongly Agree 8
Bio/Vote History
         
Van Reenen John Van Reenen MIT Agree 8
Bio/Vote History
         
Vickers John Vickers Oxford Agree 3
Bio/Vote History
         
Voth Hans-Joachim Voth University of Zurich Agree 6
Modern labor econ overwhelmingly suggests that firms have a lot of market power; that means that this is likely but not guaranteed
Bio/Vote History
         
Weder di Mauro Beatrice Weder di Mauro Gutenberg University Mainz and INSEAD Agree 5
Bio/Vote History
         
Whelan Karl Whelan University College Dublin Strongly Agree 7
It is likely that high levels of employment protection raise the natural rate of unemployment. But this is just one of many factors.
Bio/Vote History
         
Wyplosz Charles Wyplosz The Graduate Institute Geneva Strongly Agree 1
No brainer
Bio/Vote History
         
Zilibotti Fabrizio Zilibotti Universität Zurich Agree 6
Bio/Vote History
         

About the European IGM Economic Experts Panel

This panel explores the views of European economists on vital public policy issues. It does this by polling them on important policy questions, by including a way for them to explain their answers briefly if they wish, and by disseminating these responses directly to the public in a simple format.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the main areas of economics, to be geographically diverse, and to include older and younger scholars. As with the IGM’s US panel, the experts are all outstanding researchers in their fields. The panel includes recipients of top national and international prizes in economics, fellows of the Econometric society and the European Economic Association, members of distinguished national and international policymaking bodies in Europe, recipients of significant grants for economic research, highly accomplished affiliates and program directors of the Centre for Economic Policy Research and the National Bureau of Economic Research, and past and current editors of leading academic journals in the profession. This approach not only provides a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters in Europe and beyond.

Questions for the European IGM Economic Experts Panel are emailed individually to all members of the panel. They are phrased as statements with which one can agree or disagree. The experts are also asked how confident they are in their knowledge of the issue associated with the question (10 being highest). Each panelist responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering. They may also include brief comments with their responses, or provide links to relevant sources.

It is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist knows a lot about a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's knowledge that he or she does not feel well placed to judge. In this case, our panelists vote "no opinion".

Panelists suggest many of the questions themselves. Members of the public are also welcome to suggest questions (see link below). Although IGM faculty members are responsible for deciding the final version of each question, we send a draft of the question to the panel in advance and invite them to point out problems with the wording if they see any. This process helps us to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and will be analyzed for an article to appear in a peer-reviewed journal.

chicago booth