Layoffs and litigation

Paul Oyer, Scott J Schaefer

Research output: Contribution to journalArticlepeer-review

39 Scopus citations

Abstract

We study a possible link between two recent U.S. labor market trends: increased wrongful termination litigation and more frequent mass layoffs. We argue that if workers are more likely to sue when fired than when dismissed as part of a layoff, then increases in the expected costs to firms of such suits should induce substitution toward layoffs and away from individual firings. Our empirical analysis supports this assertion, showing that shortly after the passage of the Civil Rights Act of 1991, the methods of displacement changed differently by race but changes to the overall level of displacement were consistent across races.

Original languageEnglish (US)
Pages (from-to)345-358
Number of pages14
JournalRAND Journal of Economics
Volume31
Issue number2
DOIs
StatePublished - 2000

ASJC Scopus subject areas

  • Economics and Econometrics

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