From the Substance to the Shadow: The Court Embedded into Japanese Labor Markets
The modern contract law generally does not allow a perfected claim to be placed on employees. This constraint makes a claim to the return on employer's investment in recruiting and training a worker vulnerable against a possible bystanders' infringement on the claim. Accordingly, employers might tend to invest in recruiting and training less than the socially optimal level. Therefore, protection of an employer's investment, balanced against mobility of the labour market for better employer-employee matches, is desired. We explore how the Japanese state court in its early period addressed this issue in the labour market of the silk-reeling industry, which led Japan's industrialisation, and whose labour market was tight. The court first directly protected interests of employers whose employees were poached, at the expense of workers' mobility. Then it came indirectly govern trades between employers as a shadow off-the-equilibrium path. An employer whose employee was poached and an employer who poached privately negotiated to settle the poaching dispute, having a possible suit as a threat point in favour of the employer whose employee was poached. This indirect governance enabled labour market mobility to some extent with protection of the original employer's claim.
|Date of creation:||24 Feb 2014|
|Date of revision:||11 Nov 2014|
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