Every now and then I run into people (often, trained as lawyers) who insist that people do not respond to incentives. Hence, it is asserted, economics is irrelevant for studying human behavior.

Perhaps it is because I am trained as an economist, but I see people responding to incentives everywhere. And the economics profession has come up with some pretty persuasive examples of this happening in practice.

One rich source of examples comes from regulations that begin applying, or change significantly, once firms exceed some size threshold (typically measured in terms of number of employees or gross revenues). In France, many labor regulations only apply when a firm has more than 50 employees, resulting in a sharp drop in the number of firms in the neighborhood of 50 employees (Courtesy of Paul Graham @paulg on Twitter):

There is, however, evidence that this is due to deliberate misreporting, and is not a true reflection of employment at firms (h/t @LevyAntoine):

Here, the center panel reflects employment derived from payroll tax calculations, while the left and right panels are those reported by the firm for other tax purposes.

In Italy, the threshold is 15 workers (h/t
@GiuGhi) as shown in this

In the UK, the VAT starts applying once a firm has revenues of 85k  pounds, resulting in a similar phenomenon (h/t @LibrarianCap):

Requirements that workers be paid benefits should their hours exceed some minimum also lead to discontinuities in the firm size distribution. In the US, the Affordable Care Act requires employers to offer health insurance to employees working at least 30 hours per week (or 130 hours per month) to avoid paying penalties. Firms respond by advertising more part-time jobs. (h/t @ @lukas_ohl)

Similar patterns emerge around regulatory thresholds in other areas. Forf example, in France, it is compulsory to hire an architect to design a dwelling more than 170 square meters in size, leading to (h/t @Cobra_FX_):