Enforceability of labor law: evidence from a labor court in Mexico

David Kaplan and Joyce Sadka

No 4483, Policy Research Working Paper Series from The World Bank

Abstract: The authors analyze lawsuits involving publicly-appointed lawyers in a labor court in Mexico to study how a rigid law is enforced. They show that, even after a judge has awarded something to a worker alleging unjust dismissal, the award goes uncollected 56 percent of the time. Workers who are dismissed after working more than seven years, however, do not leave these awards uncollected because their legally-mandated severance payments are larger. A simple theoretical model is used to generate predictions on how lawsuit outcomes should depend on the information available to the worker and on the worker's cost of collecting an award after trial, both of which are determined in part by the worker's lawyer. Differences in outcomes across lawyers are consistent with the hypothesis that firms take advantage both of workers who are poorly informed and of workers who find it more costly to collect an award after winning at trial.

Keywords: Public Sector Corruption&Anticorruption Measures; Information Security&Privacy; Legal Products; Microfinance; Bankruptcy and Resolution of Financial Distress (search for similar items in EconPapers)
Date: 2008-01-01
New Economics Papers: this item is included in nep-dev, nep-lab and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4483

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