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Common Law Exceptions to Employment at Will and U.S. Labor Markets

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  • Miles, Thomas J
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    Abstract

    Employment relationships in the United States were historically governed by the common law doctrine of employment at will. Under this rule, parties to an employment relationship could, in the absence of an explicit contract, unilaterally terminate the match at any time, for any reason, and without penalty. In recent decades. numerous state courts have recognized "exceptions" to employment at will that limit the circumstances of worker dismissal. Using a panel of state labor market aggregates from 1965 to 1994, this article examines the effect of these exceptions on U.S. labor markets. These exceptions are seen to have no effect on aggregate employment nor unemployment. However, temporary employment is observed to increase by a statistically significant 15% following the adoption of an exception. The implied contract exception, in particular, appears to be responsible for this increase. Copyright 2000 by Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Journal of Law, Economics and Organization.

    Volume (Year): 16 (2000)
    Issue (Month): 1 (April)
    Pages: 74-101

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    Handle: RePEc:oup:jleorg:v:16:y:2000:i:1:p:74-101

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    Cited by:
    1. Eger, Thomas, 2003. "Opportunistic termination of employment contracts and legal protection against dismissal in Germany and the USA," International Review of Law and Economics, Elsevier, vol. 23(4), pages 381-403, December.
    2. von Below, David & Thoursie, Peter, 2008. "Last in, first out? Estimating the effect of seniority rules in Sweden," Working Paper Series 2008:27, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    3. Kenichi Ueda & Stijn Claessens, 2008. "Banks and Labor as Stakeholders: Impact on Economic Performance," IMF Working Papers 08/229, International Monetary Fund.
    4. David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," NBER Working Papers 12860, National Bureau of Economic Research, Inc.
    5. MacLeod, W. Bentley & Nakavachara, Voraprapa, 2006. "Legal Default Rules: The Case of Wrongful Discharge Laws," IZA Discussion Papers 1970, Institute for the Study of Labor (IZA).
    6. Jones, Michael D., 2012. "How do Teachers Respond to Tenure?," MPRA Paper 43893, University Library of Munich, Germany.
    7. Florian Baumann & Mario Mechtel & Nikolai Stähler, 2011. "Employment Protection and Temporary Work Agencies," LABOUR, CEIS, vol. 25(3), pages 308-329, 09.
    8. Sarah Hamersma & Carolyn Heinrich, 2008. "Temporary Help Service Firms' Use of Employer Tax Credits: Implications for Disadvantaged Workers' Labor Market Outcomes," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 1123-1148, April.
    9. von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.
    10. Benito Arruñada & Veneta Andonova, 2004. "Judges' cognition and market order," Economics Working Papers 768, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2008.
    11. David H. Autor & John J. Donohue & Stewart J. Schwab, 2004. "The Employment Consequences of Wrongful-Discharge Laws: Large, Small, or None at All?," American Economic Review, American Economic Association, vol. 94(2), pages 440-446, May.
    12. Fraisse, H. & Kramarz, F. & Prost, C., 2009. "Labor Court Inputs, Judicial Cases Outcomes and Labor Flows: Identifying Real EPL," Working papers 256, Banque de France.
    13. Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2014. "Employment Protection Legislation and Firm Growth: Evidence from a Natural Experiment," HUI Working Papers 102, HUI Research.

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