Legal default rules: The case of wrongful discharge laws

W. Bentley Macleod and Voraprapa Nakavachara

No 0506-19, Discussion Papers from Columbia University, Department of Economics

Abstract: One of the most vexing public policy issues is the extent to which governments should intervene into private contractual relationships. The purpose of this paper is to explore both theoretically and empirically the extent to which such interventions may enhance efficiency. In the case of employment law, economists have traditionally taken the view that intervention, such as protection against wrongful discharge, simply undoes the original intent of the parties to the agreement. We find that both the good faith and the implied contract exceptions to employment at will may enhance employment in occupations characterized by high levels of investment. These results suggest that under the appropriate conditions courts may enhance the operation of a competitive market by setting appropriate default remedies for breach of contract.

Date: 2006
View list of references View citations in EconPapers

Downloads: (external link)
http://www.econ.columbia.edu/RePEc/pdf/DP0506-19.pdf (application/pdf)

Related works:
Working Paper: Legal Default Rules: The Case of Wrongful Discharge Laws (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:clu:wpaper:0506-19

Access Statistics for this paper

More papers in Discussion Papers from Columbia University, Department of Economics
Contact information at EDIRC.
Series data maintained by Discussion Paper Coordinator ().