This new NBER Working Paper documents the growth of the number of French firms with 49 employees.
“In France, firms with 50 employees or more face substantially more regulation than firms with less than 50. As a result, the size distribution of firms is visibly distorted: there are many firms with exactly 49 employees.”
You might think that 49 person firms would be equally likely as 50 person firms but French regulation creates a discontinuity due to the conscious choice by firms to avoid growing “too big”.
Will U.S firms engage in similar behavior to reduce their exposure to new health care regulation? If many firms engage in such behavior, does this have aggregate consequences or can thousands of 49 person firms achieve similar economic production as fewer larger firms?