The goal of this paper is to detect the degree to which court decisions control the stringency of employment protection and to investigate how such judicial discretion affects labor market performance. However, identification difficulty arises because court decisions are volatile against economic and social conditions. This paper overcomes the endogeneity problem by exploiting the triennial judge transfer system in Japan, or the exogenous allocation of judges to prefectures. A key finding is that the prefecture employment rate is reduced by approximately 1.4% if a prefecture receives more pro-worker judgments than pro-employer ones in a given year.
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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number
0733.
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Russell Davidson & James G. MacKinnon, 2004.
"The Case Against JIVE,"
Working Papers
1031, Queen's University, Department of Economics.
[Downloadable!]
Juan Botero & Simeon Djankov & Rafael Porta & Florencio C. Lopez-De-Silanes, 2004.
"The Regulation of Labor,"
The Quarterly Journal of Economics,
MIT Press, vol. 119(4), pages 1339-1382, November.
[Downloadable!] (restricted)
Other versions:
Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003.
"The Regulation of Labor,"
NBER Working Papers
9756, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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