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In 2008, the French government enacted a reform to reduce the number of labor courts by 20%. This led to significant changes in the access to labor courts for many workers and em- ployers who now have to go further to litigate their conflicts. We use this reform to identify how access to labor courts impacts the labor market. Our empirical approach mainly relies on regression adjusted conditional difference-in-difference estimations. Our results show that cities that experienced an increase of distance to their associated labor court suffered from a reduction in the growth rate of job inflows (-4 percentage points), job outflows (-4.6 pp) and creations of enterprises (-6.3 pp) between 2007 and 2012 compared to non-affected cities. We find partially opposite but non-significant effect for cities that experienced a decrease in the distance to the labor court. Our results are showed to be robust to changes of composition in the control group, changes in the matching algorithm, the inclusion of congestion effects, and to alternative econo- metric specifications (multilevel mixed-effect models).
