ABSTRACT: The article aims at providing an original contribution to the economic assessment of labour law issue. It is based on a theoretical framework shared by economists and jurists which unable an assessment of employment protection legislation in a dynamic perspective focusing on implementation of law and enforcement issues. The article focuses on activation and use of legal rights instead on their sole nominal content. It considers litigation as a relevant basis for assessment of law which permits a reconsideration of both procedures and motives of individual and collective layoffs. The litigation viewpoint is also the basis of a critical assessment of employment protection indicators owing to the fact that they do not capture nor judicial enforcement of labour law nor courts rulings in dismissal cases. An empirical quantitative analysis is then conducted in order to try to explain why labour contract litigation in France decreases sharply since several years. The reasons can be found in two factors : first, a huge trend of job creation in small firms ; second, a decrease of the average length of service of fired workers. Finally, the report scrutinizes the argument that a strict regulation of dismissals for economic motives leads the employers to strategically use individual dismissal procedures. The ?substitution effect? does not seem to be supported by empirical evidence in the French case. Classification JEL : J53, J64, K31.
Revue de l'OFCE. 01/2008; n° 107(4):29-64.