- Research Handbooks in Law and Economics series
Edited by Cynthia L. Estlund and Michael L. Wachter
Chapter 2: Neoclassical labor economics: its implications for labor and employment law
The application of economics to labor and employment law trails its application in virtually all other areas of business and commercial law. Topics such as contracts, torts, corporations, commercial law, and tax have all readily integrated economic reasoning as an assist to legal reasoning. In almost all these cases, moreover, the economics concept of efficiency has been accepted as one of the goals of the law. This is decidedly not the case in labor law or, for the most part, in employment law. Disagreement over fundamental principles serves as an important explanation for this relative lack of emphasis on economic reasoning. Most labor law scholars believe deeply that collective bargaining is the preferred framework for the employment relationship. They tend to share the original goal of the National Labor Relations Act (NLRA), which remains on the books today, of equalizing bargaining power by enabling workers to engage in collective bargaining with their employers. The NLRA’s goal of equalizing bargaining power encompassed both procedural and substantive ends: it sought to promote the mechanism of collective bargaining and, in doing so, to raise wages above the market wage that would prevail absent unionization.
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