Encyclopedia of Law and Economics
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Encyclopedia of Law and Economics

Edited by Gerrit De Geest

The second, expanded edition of the acclaimed Encyclopedia represents a major update of the most authoritative reference work in the field of law and economics and the nine print volumes are now released online as a single integrated product. The Encyclopedia provides balanced and comprehensive coverage of the major domain in law and economics, including: criminal law, regulation, property law, contract law, tort law, labor and employment law, antitrust law, procedural law, and the production of legal rules. Each theme or volume is overseen by a leading scholar and each of the 156 entries is prepared by an expert in the field, providing an in-depth and authoritative overview of the individual topic, combined with an exhaustive bibliography, allowing users to access and filter the entire corpus of literature in law and economics. As with the print edition, the Encyclopedia is unique in serving both as an entry point and a platform for advanced research. The online edition is enhanced with Elgaronline’s powerful search tools, facilitating the search for key terms across the entire Encyclopedia, whilst the browse function allows users to move seamlessly between the volumes. These elements combine to create a powerful research tool for any researcher or scholar in the field of law and economics.
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Kenneth G. Dau-Schmidt, Seth D. Harris and Orly Lobel

[In: Volume 2, Kenneth G. Dau-Schmidt, Seth D. Harris and Orly Lobel (eds) Labor and Employment Law and Economics]

The purpose of this volume

Labor and Employment Law and Economics is one of the first separate and subject-specific volumes of Edward Elgar Publishing’s Encyclopedia of Law and Economics. Like its parent publication (Bouckaert and DeGeest 2000 ), this volume offers a comprehensive collection of chapters surveying the law and economics literature. Unlike the original Encyclopedia, it focuses on the employment relationship, labor markets and worker organizations, and regulation of those subjects. The specialization of the volume reflects the extraordinary growth of the field, its complexity and diversity. This focus does not imply a normative position regarding whether and how economics should influence the law governing these topics. Rather, this volume explains the economic background, motivations, and implications of labor and employment law so that researchers, teachers, policymakers, advocates, and jurists throughout the world will be better able to advance their own preferred positions.

Distinguished scholars from various disciplines within this field have contributed chapters. Their task was complicated. Economics had already begun to play a significant role in scholarly debates over labor and employment law long before the original Encyclopedia was published in 2000. In the nine short years since, scholarly works addressing the economics of labor and employment law have proliferated. Yet, no consensus has been reached. To the contrary, ideological and methodological disputes, and even disagreements about the underlying facts, continue. This volume is agnostic about these disputes, although individual chapters may not be. This volume’s role is to educate and open paths to further research rather than to advocate.

Each chapter includes a literature review and an extended bibliography. The literature reviews address both economic theory and empirical studies that have tested the hypotheses suggested by economic theory. The chapters include comparative analyses and the volume reflects the internationalization of the field. The result is a substantial and valuable resource for anyone who is serious about understanding the economics of labor and employment law.

p. xxviThis volume’s structure

The first part of this volume, ‘The Economics of Regulating the Labor Market’, consists of a single comprehensive chapter by Bruce E. Kaufman, ‘Labor Law and Employment Regulation: Neoclassical and Institutional Perspectives’. It provides an extensive overview of the history, taxonomy, and theories of the economic analysis of labor markets, employment, and labor and employment law. It is a worthwhile introduction to all the chapters that follow.

Most of the rest of this volume is organized to track the chronology of the relationship between an employer and a worker. The volume’s second part, ‘Governance and Self-governance of Employment Relationships’, addresses how the parties commence and sustain an employment relationship through some form of contractual arrangement. Chapter 2 , by Ann-Sophie Vandenberghe, examines employment contracts and, in particular, the relational nature of employment contracts and the associated debate over whether and why the legal rules governing employment contracts should differ from those regulating other types of contracts. Chapter 3 , by Kenneth G. Dau-Schmidt and Arthur R. Traynor is entitled ‘Regulating Unions and Collective Bargaining’ and addresses several theories of the law and economics of the principal system of industrial self-regulation.

The chapters organized within the third and largest part – Employment ‘Terms and Conditions and Their Regulation’ – address how, in the process of forming and sustaining an employment relationship, the parties set and adjust the terms and conditions of their relationship within regulatory strictures. Chapter 4 , by Lisa M. Lynch, discusses the market for, and market failures associated with, ‘Investments in Adult Lifelong Learning’. The next five chapters discuss the distribution of the proceeds of employment relationships through various forms of compensation paid by employers to their employees and how governments regulate them.

In Chapter 5 , Simon Deakin and Frank Wilkinson address the neoclassical model of nations’ minimum wage legislation and critiques of that model. Chapter 6 , by David A. Hyman, explores the economics of the employer-provided health insurance system that predominates in the United States. In Chapter 7 , Randall S. Thomas examines ‘International Executive Pay: Current Practices and Future Trends’ by considering the differences between the prevailing systems in the United States and other developed countries and whether those systems are converging toward a single globalized approach. Chapter 8 , by John F. Burton, Jr, focuses on workers’ compensation and how, whether, and according to what economic theories and regulatory structures workers receive payments in lieu of wages when they suffer workplace illnesses or injuries.

Moving beyond p. xxviithe discussion of compensation, but closely related to the discussion of compensation for workplace injuries and illnesses, in Chapter 9 Sidney A. Shapiro addresses the economics of strategies for avoiding workplace illnesses and injuries in his discussion of occupational safety and health regulation. Stewart J. Schwab’s general discussion of the welfare consequences of regulating employment discrimination, particularly race, sex and disability discrimination, introduces a three-chapter consideration of discrimination in the terms and condition of employment in Chapter 10 . In Chapter 11 , Joyce P. Jacobsen discusses ‘Accommodating Families’, employers’ and governments’ responses to the increased demand for work-family programs and regulation, and the economics and effects of regulatory efforts in this area. The discussion of workplace disability by Seth D. Harris and Michael Ashley Stein in Chapter 12 analyzes the economics of legal mandates on employers to accommodate workers with disabilities by removing barriers to full integration of these workers into the workplace.

With a particular focus on developments in the United States, in Chapter 13 Douglas M. Mahony and Hoyt N. Wheeler consider both employer-managed and third-party systems for resolving workplace disputes that are outside or preliminary to traditional governmental or judicial processes in their discussion of ‘Adjudication of Workplace Disputes’.

The fourth part, entitled ‘Regulating Employment of Special Populations’, focuses on groups of workers who are typically unable to bargain over the terms and conditions of their employment. In Chapter 14 , Alessandro Cigno considers the economics of child labor, while in Chapter 15 , Patrick Belser addresses the economics of slavery, forced labor and human trafficking. Both chapters consider the economics of these groups’ ‘employment’, including by examining the complicated effects of parents’ decision-making role in the child labor context and the use of coercion in the slave labor and human trafficking contexts. These chapters also consider national and international regimes regulating these groups’ labor.

The fifth part – ‘Governing Termination of Employment Relationships and Post-employment Relationships’ – explores the end of the employment relationship and its aftermath. In Chapter 16 , J.H. Verkerke addresses the economics of ‘employment protection laws’ regulating discharge, an employer’s involuntary termination of an employment relationship. Stephen A. Woodbury discusses unemployment in Chapter 17 , with a particular focus on definitional and measurement questions, as well as the operation and theory of public, employer-funded insurance systems that provide partial wage substitution to unemployed workers and related efforts to return those workers to employment. Orly Lobel’s consideration of intellectual property and restrictive covenants in Chapter 18 examines contractual and regulatory constraints on workers’ use of knowledge p. xxviiiand information acquired while employed with one employer for future employers’ or their own benefit. Finally, in Chapter 19 Jonathan Barry Forman addresses the history, justification, regulation and economics of pensions and retirement.

This volume’s sixth part, entitled ‘Governing Global Labor Markets’, considers how globalization has influenced, even shaped, individual or collectively bargained contractual agreements between workers and employers. Chapter 20 , by Jagdeep S. Bhandari, discusses immigration, with a particular focus on the ‘in-sourcing’ of low-skilled workers and its influence on labor market outcomes. In Chapter 21 , Jeffrey M. Hirsch examines employee collective action in a global economy; the economics of traditional union organizing and new forms of transnational worker organizing designed to protect workers from the effects of globalizing labor markets and, to some extent, facilitated by the technological developments that have hastened globalization. In Chapter 22 , Orly Lobel examines the problem of ‘National Regulation in a Global Economy: New Governance Approaches to 21st Century Work Law’ and assesses the shrinking ability of government to regulate national labor markets in the face of globalization and regulators’ increasingly innovative restructuring of government intervention in response. Building on these initial chapters, in Chapter 23 Richard N. Block and Jonas Zoninsein discuss the traditional neoclassical economic approach to international labor standards and international trade and critiques that approach while also reviewing the various forums in which labor standards have been codified.

Chapter 24 by Katherine V.W. Stone, which alone constitutes this volume’s seventh and final part, looks to ‘The Future of Labor and Employment Law’. After reviewing changes in the nature of American employment relationships over the past few decades, including developments discussed in earlier chapters of this volume, this final chapter offers a prediction about ‘A Labor Law for the Digital Era: The Future of Labor and Employment Law in the United States’.

Reading this volume’s literature reviews

Each chapter’s literature review is an extended essay (9,000 to 15,000 words) which will introduce the reader to the issues addressed in the chapter. Consistent with the heterogeneity of the topics (and authors) included in this volume, the literature reviews are not structured identically. Generally speaking, each chapter begins with an introduction that describes the critical issues in that topic area. The literature addressing these issues is described and alternative theoretical approaches presented and contrasted. A discussion of differences between the American and European regulatory frameworks (and perhaps others) may also be included along with the p. xxixauthor’s own critical reflections on competing theories and comparative practices. A review of available empirical evidence typically follows along with a conclusion. Often, the chapters include useful tables, graphs and other figures illustrating the materials explored in the various sections.

Understanding the literature reviews should not require formal training in economics, econometrics or statistics, although the literature reviews will be valuable to those who have such training. The authors have endeavored to write accessible chapters that collect the leading theoretical arguments and empirical evidence without glossing over important subtleties. Non-economists and non-lawyers should not need a translator to benefit from this volume.

Using this volume’s bibliographies

This volume is not intended to be the last word on the economics of labor and employment law. Rather, the literature reviews are guidebooks to the subjects considered. The bibliographies are road maps accompanying these guidebooks that will direct readers both to the chapter’s source materials and to a far larger body of relevant references than the authors could directly cite in their texts. Some of these references address the particular topic of the chapter. Still others provide background in law, sociology, labor economics, philosophy, political theory, or other fields that will help the reader understand the chapter. Thus, the reader should not be surprised to find that some sources are cited in more than one bibliography.

The need for these bibliographies should be obvious to anyone who has attempted research into the economics of labor and employment law. The subjects addressed in this volume have been discussed and debated in scholarly journals in law, economics, sociology, industrial relations, political theory, history, and other disciplines, as well as in books, conference volumes, and anthologies that could be assigned any of these labels. For researchers, this is a pitfall of working in a field defined by its interdisciplinarity. No single index can direct researchers to all, or even most, of the available materials. The goal of these bibliographies is to offer extensive – if not perfectly comprehensive – guidance to readers seeking information, analysis, and evidence beyond that provided by the literature reviews.

This volume’s citation forms

Legal scholars and other social scientists do not follow the same conventions when citing source materials. To avoid confusion, we have adopted a simple citation form that provides all of the necessary information without unnecessary formality. References in the text will provide the author’s name, the work’s original year of publication, the year of publication if a later edition was used, and the page number or numbers. Entries in the p. xxxbibliographies include the author’s (or authors’) name(s), the year of original publication, the title of the article, book, periodical, journal, or thesis, the volume number and issue of the book of periodical (where needed), the publisher’s name and location, and the opening and closing page numbers (where appropriate).

Editors’ acknowledgments

This volume would not have been possible without important contributions beyond those listed in the table of contents. Edward Elgar Publishing and its staff, particularly Nep Elverd, deserve credit and thanks for choosing labor and employment law as one of the first of several subject-specific volumes in its law and economics encyclopedia series. We are grateful that they gave us the opportunity to participate in this important project.

This project benefited, as other of our research efforts have, from the generous financial support of our home institutions: Indiana University, New York Law School, and the University of San Diego. We would also like to acknowledge the student research assistants who contributed to this project: for Ken Dau-Schmidt, Ryland Sherman and Kurt Kline; for Seth Harris, Michelle Tonelli, Maria Ingravallo, Damien Maree and Marcelo Martinez; and for Orly Lobel, Melanie Larzul, Nathan Nunez, John Rogers and Katherine Stanton.

We received advice from dozens of colleagues across the world regarding topics that should be included in this volume and prospective authors to write about those topics. They are too numerous to name here, but we are grateful to all of them. Of course, our most enthusiastic thanks are owed to the outstanding scholars who contributed chapters to this volume. It was our pleasure to work with each and every one.



Bouckaert, Boudewijn and De Geest Gerrit (2000), Encyclopedia of Law and Economics (Vols I–IV), Cheltenham, UK and Northampton, MA, USA: Edward Elgar.