Layoffs and Litigation
Volume: Volume 31, No. 2
Issue: Summer 2000
Pages: pp. 345-358
Authors: Paul Oyer and Scott Schaefer
Title: Layoffs and Litigation
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.
JEL Classification
Labor Turnover; Vacancies; Layoffs includes separations, hires, redundancy,
job tenure, displaced workers (J630)
Labor Law (K310)
Firing
Layoffs
Termination