Economy / Finance

Why small isn’t always beautiful: labor regulations and firm growth

From Microeconomic Insights
January 5, 2017 - 8:38am

Regulations often have unintended costs as well as intended benefits. France has a large number of labor market regulations that bind when a firm has 50 or more employees. These regulations are intended to help workers, but they also act as a tax on large firms. This discourages firms near the threshold from growing larger and producing more output. We calculate that these French labor regulations depress overall economic output by over 3\%. The post Why small isn’t always beautiful: labor regulations and firm growth appeared first on Microeconomic Insights.



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