The Analysis of Employment Relationship in Contract Economic Theories: a Critical Review Based on the Nature of American and French Labor Laws

Despite the numerous economic works on the nature of the firm, only a few studies have clearly taken into account the legal and institutional contexts of the employer-employee relationship. This paper aims at comparing the regulation rules of the employment relationship advocated by contract economic theories to the American and French labor laws in both a positive and normative perspective. From a positive perspective, the contract approaches to the firm – transaction cost economics, the nexus of contracts theory and the modern theory of property rights – are similar to the tradition of American labor law. However, from a normative point of view, it appears that if contract economic theories seem to be partially in line with certain principles of the French labor law, there is a strong inconsistency between these approaches and the role that the French legal system gives to the State and to the law courts (and judges).