Productivity Puzzles in France

Since 2008, France experiences a sharp productivity slowdown. Both output per hour andtotal factor productivity are particularly deceptive in the market economy. This recent trendcontrasts with the acceleration of productivity during the previous crisis in the 1990’s and thecontinuous increase during the following decade. This text provides the first comprehensiveexploration of this puzzling break. The direct impacts of the Great Recession on industrycomposition or reallocation of capital are not significant suspects for a slowdown occurringacross business activities. Labour market mechanisms are better candidates. On the onehand, the French labour market policy has massively boosted the creation of low-productivejobs including very-short term employees and self-employed workers. On the other hand,firms, which benefit from massive tax cuts, have hoarded their high-skilled workforce. Inaddition, the spread of innovative HRM incentives, e.g. employee shareholding, seems tohave turned productivity more sensitive to the business cycle (and especially to the fall ofstock markets)