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Labor courts, nomination bias, and unemployment in Germany

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  • Berger, Helge
  • Neugart, Michael

Abstract

Labor courts play an important role in determining the effective level of labor market regulation in Germany, but their application of law may not be even-handed. Based on a theoretical model of the legal process and a new panel data set, we identify a nomination bias in labor court activity — that is, court activity varies systematically with the political leaning of the government that has appointed judges. In an extension, we find a significant positive relation between labor court activity and unemployment, even after controlling for the endogeneity of court activity.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 27 (2011)
Issue (Month): 4 ()
Pages: 659-673

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Handle: RePEc:eee:poleco:v:27:y:2011:i:4:p:659-673

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Courts; Labor courts; Law production; Nomination bias; Unemployment; Regulation; Germany;

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References

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  1. Joel Waldfogel, 1993. "The Selection Hypothesis and the Relationship between Trial and Plaintiff Victory," NBER Working Papers 4508, National Bureau of Economic Research, Inc.
  2. David H. Autor & John J. Donohue & Stewart J. Schwab, 2006. "The Costs of Wrongful-Discharge Laws," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 211-231, May.
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  4. Lars P. Feld & Stefan Voigt, 2003. "Economic Growth and Judicial Independence: Cross Country Evidence Using a New Set of Indicators," CESifo Working Paper Series 906, CESifo Group Munich.
  5. Martin Schneider, 2005. "Judicial Career Incentives and Court Performance: An Empirical Study of the German Labour Courts of Appeal," European Journal of Law and Economics, Springer, vol. 20(2), pages 127-144, September.
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Citations

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Cited by:
  1. Carsten Hefeker & Michael Neugart, 2009. "Labor Market Regulation and the Legal System," MAGKS Papers on Economics 200915, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Heijdra, B.J. & Ligthart, J.E., 2005. "Fiscal Policy, Monopolistic Competition and Finite Lives," Discussion Paper 2005-126, Tilburg University, Center for Economic Research.
  3. Claudia Buch & Martin Schlotter, 2013. "Regional origins of employment volatility: evidence from German states," Empirica, Springer, vol. 40(1), pages 1-19, February.
  4. Potrafke, Niklas, 2013. "Minority positions in the German Council of Economic Experts: A political economic analysis," European Journal of Political Economy, Elsevier, vol. 31(C), pages 180-187.
  5. Voigt, Stefan, 2012. "On the optimal number of courts," International Review of Law and Economics, Elsevier, vol. 32(1), pages 49-62.
  6. Niklas Potrafke, 2013. "Minderheitsvoten im Sachverständigenrat: Eine politisch-ökonomische Analyse," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(09), pages 37-40, 05.

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