Labor and Employment Law
We estimate the effects on employment and wages of wrongful discharge protections adopted by U.S. state courts during the last three decades. We find robust evidence that one wrongful-discharge doctrine, the implied-contract exception, reduced state employment rates by 0.8% to 1.7%. The initial impact is largest for female and less-educated workers (those who change jobs frequently), while the longer-term effect is greater for older and more-educated workers (those most likely to litigate). By contrast, we find no robust employment or wage effects of two other widely recognized wrongful-discharge laws: the public-policy and good-faith exceptions.
Schwab, Stewart J.; Autor, David H.; and Donohue III, James J., "The Costs of Wrongful-Discharge Laws" (2006). Cornell Law Faculty Publications. Paper 26.
Review of Economics & Statistics, vol. 88, no. 2 (May 2006)