Justine Féliu - Research

Labor Markets and the Rise of Contractor Firms

Abstract: This paper examines how competition among contractor firms affects wages of both outsourced and in-house workers. Using matched employer-employee and balance-sheet data for France (2009–2021), I document substantial heterogeneity in outsourcing across local labor markets: despite a stable average outsourcing share, markets with initially high outsourcing experience significant increases, driven by a surge in contractor-firm entry. Exploiting a shift-share instrument based on firms’ initial employment composition, I find that a one-standard-deviation increase in outsourcing exposure reduces contractor firms’ profit margins by about 13 percentage points and contractor firms' workers’ hourly wages by roughly 8\%, while raising profits, employment, and wages at non-contractor firms. To interpret these findings, I develop a search-and-matching model with endogenous outsourcing and Cournot competition among contractor firms. Firms choose between outsourcing and in-house production based on heterogeneous fixed costs. The model shows that when fixed costs are high relative to in-house productivity, outsourcing becomes widespread, and lower cost dispersion can further expand it by reducing the price elasticity of demand. A competition shock driven by lower vacancy-posting costs at contractor firms shifts employment toward outsourcing and widens the wage gap between outsourced and in-house workers. Calibrated to French local labor markets, the quantitative model accounts for about 30\% of the estimated widening of this gap, with margin compression translating into wage losses concentrated among workers already employed at contractor firms.

Presentations: Macro Seminar (PSE), Séminaire de l'ERUDITE (Créteil University), Brown Bag Seminar of Innovation Economics (Collège de France), Labor/Public Workshop (Sciences Po), 7th QMUL PhD Workshop in Economics and Finance, 24th Journées LAGV (AMSE), IZA@LISER Summer School in Labor Economics 2026

Corporate Taxation and Firm Dynamics co-authored with Gemma Harris (PSE)

Abstract: We propose that lower corporate tax rates can contribute to falling business dynamism by favoring large incumbent firms over potential entrants. Using firm balance-sheet data from France, we first document significant heterogeneity in implicit corporate tax rates across the firm size distribution and show that the corporate tax becomes regressive at the very top. Within industries, a tax rate of 2 percentage points (pp) lower on the largest firms by is associated with firm creation rates between 1 and 2 pp lower. We then use the 2017 corporate tax reform in France to estimate the dynamic effects of a corporate tax cut on firm entry. Leveraging variation across firm size and taxation regime at the industry level, we find that industries more exposed to the corporate tax cut experienced relatively lower firm entry in years following the implementation of the reform. Finally, we build a theoretical model of firm dynamics that accounts for heterogeneous responses across firms to changes in the statutory rate. While a corporate tax cut raises the expected after-tax profits of potential entrants, it also disproportionately benefits large incumbents, allowing them to increase their relative size and thus mark-up and market share. Average price increases as markups rise, leading to higher input costs and barriers to entry. When this indirect effect raising barriers to entry is strong enough, it outweighs the direct effect of higher expected after-tax profits for entrants and firm creation falls.

Presentations: Macro Seminar (PSE), International Tax Observatory Internal Seminar, HEC PhD Conference 2026