We estimate interindustry wage differentials using new French longitudinal data that allow a tracking of workers and their firms over time. We find that, when measured on a cross‐sectional basis, they primarily reflect the interindustry variations in unmeasured labor quality. However, interindustry wage differentials are only a minor component of interfirm wage differentials. The average differential in wages paid to the same workers by different firms is about 20%–30%. In a given industry, wage policies are more favorable to workers in large, capital‐intensive firms.

The decline in the unskilled share of French employment is chiefly due to the slackness of domestic demand for those industries with the highest proportion of unskilled workers. The spread of computers has not been particularly conducive to substitution between skilled and unskilled labor. We test and accept the hypothesis of technical-progress neutrality within French industries. The mechanisms that generate inequality do not appear to be the same in France and in the United States. The source of inequality isn't so much technical progress per se as its interaction with the institutions that regulate the labor market.

Leisure externalities across households have important implications for labor market regulations but have proven very difficult to identify. This paper exploits the unique features of school holidays and paid leave regulations in France to show that exogenous increases in the amount of leisure time enjoyed by workers living with children induce very significant increases in the demand for leisure of workers living in other households. We also provide evidence that these cross effects are driven by complementarities in nonmarket time rather than workplace norms or workplace externalities.

We study interdependencies in spousal labor supply by exploiting the design of the French workweek reduction, which introduced exogenous variation in one's spouse's labor supply, at constant earnings. Treated employees work on average two hours less per week. Husbands of treated women respond by reducing their labor supply by about half an hour, consistent with substantial leisure complementarity, and specifically cut the nonusual component of their workweek, leaving usual hours unchanged. Women's response to their husband's treatment is instead weak and rarely statistically significant, possibly due to heavier constraints in the organization of their workweek. (JEL J16, J22, K31)