The Costs of Wrongful-Discharge Laws

David Autor, John Donohue and Stewart J. Schwab

The Review of Economics and Statistics, 2006, vol. 88, issue 2, 211-231

Abstract: We estimate the effects on employment and wages of wrongful-discharge protections adopted by U.S. state courts during the last three decades. We find robust evidence that one wrongful-discharge doctrine, the implied-contract exception, reduced state employment rates by 0.8% to 1.7%. The initial impact is largest for female and less-educated workers (those who change jobs frequently), while the longer-term effect is greater for older and more-educated workers (those most likely to litigate). By contrast, we find no robust employment or wage effects of two other widely recognized wrongful-discharge laws: the public-policy and goodfaith exceptions. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2006
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Working Paper: The Costs of Wrongful-Discharge Laws (2003)
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