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Friday, March 17, 2006

Parisian Discontent

16france Whether or not you agree with their cause, you’ve got to hand it to the French revolutionaries – they are young and they are committed to their sense of economic and social justice: that employment should not be at-will. The liberty-equality-fraternity promised trio never fails to move French workers into protest and action. In a concerted national effort, students, unions, educators and other social movements have swept the streets of greater Paris to resist the adoption of new legislation “the first job contract law”, which would make it easier to fire younger workers. From the NYT: “‘this contract is like living beneath a guillotine,’ said Charlotte Billaud, 21, a political science student in the third year of her five-year program at the Sorbonne. ‘When you can be fired without reason, you do not dare criticize your boss or join a union.’”

Posted by Orly Lobel on March 17, 2006 at 05:21 PM | Permalink


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Yes, repeatedly calling law students "ignorant child[ren]" sure is funny. It's kind of like when my dean calls me a "waste of a faculty line"; even though he says it in writings that lack any other trace of humor, when making serious points about the shortcomings of faculty, I find it quite endearing.

Posted by: Scott Moss | Mar 22, 2006 1:57:13 PM

Back to the substance, I was struck by the quote from the French student that "When you can be fired without reason, you do not dare criticize your boss or join a union.’” It certainly is a problem in the U.S. that far too many workers are fired for their union support, and one can see why just cause rules (and weak remedies under the NLRA) contribute to that problem.

Posted by: Joseph Slater | Mar 22, 2006 1:53:25 PM

Joseph: If you cannot see humor in calling a six-feet-tall former engineer and a father of three “an ignorant child” only because he happened to be a 2L (or, worse yet, a G-2), I cannot help you. You must be missing a whole genre of academic jokes.

But this non-seriousness, of course, does not at all contradict my point that empirical studies published in law reviews are presumptively useless. A six-feet-tall former engineer and a father of three is surely not a child, but neither is he an empiricist capable of reviewing a serious, technically complicated study.

Posted by: Kate Litvak | Mar 22, 2006 11:37:03 AM

Kate: You can't have it both ways. Either (1) you're serious about calling law review editors "ignorant children," which then allows you to conclude that law review articles you haven't read are "not fit to discuss in academic circles" simply because they are law review articles; or (2) you're not serious, in which case your students and others can all have a good laugh, understanding that (1) above is meant to be an attempt at humor, not a real argument.

Posted by: Joseph Slater | Mar 22, 2006 10:53:13 AM

Orly: to the best of my knowledge, LLSV have never been accused of “manipulating” any “indicators” (whatever that means). To the contrary, they have made their coding public and available for all to use and criticize. If you have any information about their data-manipulating activities, describe it publicly. If you don’t have any such information, stop spreading rumors.

Joseph: if you need a definition of insult, re-read Orly’s comment above. Accusing someone of data-cooking without any supporting evidence is an insult. Noticing that someone’s list of “empirical studies” contains no respectable sources is not an insult. Calling law students “ignorant children” is not an insult either – at least not to my students, who actually have a sense of humor.

Posted by: Kate Litvak | Mar 22, 2006 10:40:53 AM

Orly, thanks for the lead on the Donahue & Co. study -- I hadn't heard of that, and given that I just wrote a doctrinal/theory piece on employment-at-will exceptions, I'll definitely have to check out this new empirical work on the subject!

Posted by: Scott Moss | Mar 22, 2006 10:39:15 AM

Thanks to Orly Lobel for getting this discussion back on track. The New York Times today reported that the French government is considering revising its proposal, perhaps to make the period of "at will" only one year.

One thing about which I'm curious. It's been my impression that in countries with just-cause provisions, some other forms of employment law are somewhat less well developed. For example, anti-discrimination law is used and arguably needed less, because discharge due to, say, race, would simply be a discharge that lacked just cause. One wouldn't need the complex ediface of anti-discrimination law we have developed in the U.S. So, is it possible that a French worker denied just cause protection would actually have fewer protections than U.S. workers, at least in some regards?

Kate: Since you're substituting insults for arguments, I will only say that I'm curious as to whether you call the law review editors at your school "ignorant children" to their faces.

Posted by: Joseph Slater | Mar 22, 2006 10:10:02 AM

Let me interject and say that there are indeed, as many of you have pointed out, many studies on the relationship between employment levels and legal provisions job security. There is no doubt some correlation, although recent studies have shown only very modest effects. For example, a yet-be published study by John Donohue, Stew Schwab and David Autor of the effects of exceptions to at-will adopted by some states finds no effects on unemployment levels in relation to some exceptions (public policy wrongful termination and good faith) and only very modest effects of other modes of just cause defaul flip (implied in fact exception). DAVID H. AUTOR MIT -Economics; JOHN J. DONOHUE III Yale Law School, and Stewart Schwab, Cornell Law School, The Costs of Wrongful-Discharge Laws http://www.nber.org/papers/w9425.pdf

The EU has been dealing with these questions for several years now, and it is, like many other questions about correlation and causation in vast macro-processes, very difficult to draw clear and precise conclusions. Modesty in such grand empirical studies is always of the essence. We know well that statistical approaches are constantly advancing and there are so many variants and different ways to use indicators that manipulation is quite easy (for those of you who are familiar with some of the controversies around the integrity of some members of the Shleifer, Glaeser, la Porta, and Lopez-de-Silanes gang, enough said. But as some of you pointed out, there are so many different types of "job security" and there are also many ways to consider and deal with unemployment--for example, european countries often have more generous welfare and unemployment packages, in both scope and breadth of coverage. That too is being challenged as the EU moves to integrate).
I do think that the last point raised by Philippe is a very important one. The level of unemployment at any given time is but one of many indicators of growth, productivity, competitiveness, the economic and social health and prosperity of a society. Poverty levels, quality of work and life, wealth gaps, upward mobility, health and safety, education levels, civil rights and liberties, voice and democratic engagement are some others. To reduce the debate to the UE/Job Security correlation (shaky as it is) is far from satisfactory.
That said, I personally believe that given today's global competitive labor markets, there is certainly a need for a sensible between flexibility and security (the Europeans are playing with the term "flex-security). To strike such balance with more flexibility in firing younger, more recent hires, seems to me, without knowing all the details of the French employment regime, a pretty reasonable one.

Posted by: Orly Lobel | Mar 22, 2006 1:10:47 AM

Bravo for an interesting argument although I think the key remark about what are adequate indicators of well being has been somehow lost in the debate. It seems clear to me being "employed" is not a valid indicator as many "employed" people remain extremely poor in the US (and other countries). As a Frenchie living in the US for a while I am still amazed by the fact so many people (even "educated") seem unable to even conceive that 5 or 6 paid vacation can be a standard not a dream. The countries and the companies that provide those paid vacations have not gone bankrupt, they are not anticapitalist but they certainly are much more civilized than the US as it is now regressing. Mr de Villepin will learn the French Society is not ready to go that way. As an explanation of the cultural differences in those matters I recommend reading the books by Emmanuel Todd.

Posted by: Philippe Boucher | Mar 22, 2006 12:16:56 AM

Joseph: let’s do it again. I stated a hypothesis you didn’t like. You responded by claiming to have empirical evidence that refutes my hypothesis. That would have been very persuasive, except half of your “empirical evidence” came from partisan organizations and another half from journals edited by ignorant children. This is against a backdrop of a major body of literature written by labor economists. When I pointed this out, you didn’t say, “Oh well, I am sort of embarrassed you noticed, but anyway, here is a bunch of reputable sources that went through rigorous peer review and still refute your hypothesis.” Instead, you started attacking me. This speaks volumes. When I get into arguments about corporate law, I don’t cite papers from the Cato institute, hoping that readers wouldn’t notice.

Oh, and I never said law reviews are useless for all purposes. They are useless as a source of empirical evidence (among other things).

I now could go to JSTOR or NBER or other such places and search for serious labor economics papers on the point, but why? You didn’t do any such thing, and it’s _your_ field. I’ll save my time too.

Posted by: Kate Litvak | Mar 21, 2006 10:32:15 PM


So your only response to law review articles that you haven't read is to say that such law review articles are "not worth mentioning in academic quarters"? Are all law review articles not worth mentioning in academic quarters or just ones with which you disagree? And does your employer share your position?

As to your statement: "you resolved to accuse me in ad hominem attacks on a partisan publication," of course you were making ad hominem attacks. You understand what that term means, right?

Where do we go from here? (1) Again, if you know of any good studies on the effect of just cause discharge laws on employment rates in Europe, you could cite them. (2) You could try to address the substantive arguments presented by Scott, A-Train, and myself. Even if you don't care for law review articles, you could choose to respond to arguments or facts presented in those articles: e.g., some parts of Europe have, in recent decades, had lower unemployment rates than the U.S.; the facts and arguments in the Doeringer piece A-Train quoted and linked; or etc.

Posted by: Joseph Slater | Mar 21, 2006 6:13:28 PM

Joseph: I have started by presenting a very plausible hypothesis -- which also, to the best of my knowledge, happens to be the dominant view among economists. I never asked anyone for any empirical support for their contrary hypotheses. I was perfectly happy to hear the elaboration of Scott’s hypothesis about the impact of letters “U” and “S” on employment levels.

Then, you volunteered a bunch of citations, none of which were worth mentioning in academic quarters. When I pointed this out, you resolved to accuse me in ad hominem attacks on a partisan publication.

I am not sure where you want to go from here. Should I explain why I (and most economists) think that when an employer cannot fire his employees, he will think twice before hiring them?

Scott: you deserve a prize for a devoted effort to remember my comments from different blogs and newspaper interviews. Perhaps one day you can become my biographer.

Posted by: Kate Litvak | Mar 21, 2006 5:25:19 PM

But Joseph, what you're missing is that if a journal is not peer reviewed, one can dismiss its contents out of hand without reading it. Because non-peer-reviewed journals don't screen articles effectively, Kate's generality logically follows: "one simply cannot trust a non-academic and non-peer-reviewed publication." This rule is quite a handy time-saver in one's efforts to keep up with the literature, given that 90%+ of legal scholarship is in non-peer-reviewed journals and therefore can be safely ignored.

By the way, this blogging has nothing to do with scholarship, in case you were wondering.

Posted by: Scott Moss | Mar 21, 2006 5:08:10 PM


Why don't you try engaging the actual arguments others have presented or formulating some of your own instead of making what come down to ad hominem attacks on sources you haven't even read?

Posted by: Joseph Slater | Mar 21, 2006 4:42:10 PM

Which peers reviewed the book that you cited? I googled the Wheeler et al. book, and it looks like it came out at a think tank of a rather obvious political orientation, rather than an academic publishing house (university press). That’s not peer review.

There is so much junk coming out of think tanks and law reviews these days that one simply cannot trust a non-academic and non-peer-reviewed publication. I have no interest in giving a careful read to every paper cited on a blog to verify that no cooky statistics is going on.

Notice that I didn't ask anyone for citations. But people who volunteer citations should volunteer meaningful sources, especially in their own field. I know I can name a bunch of reputable academic papers in my field off the top of my head.

Posted by: Kate Litvak | Mar 21, 2006 4:16:17 PM


Ad hominem attacks on the ILO aside, law review articles such as those that I cited are not typically peer-reviewed, but legal scholars don't view them as unworthy of consideration for that reason. I also cited a book, and books typically are peer-reviewed before publication (mine certainly was).

Are there any studies on the effect of just cause discharge rules in Europe on employment rates that support your position that you would like to cite?

Posted by: Joseph Slater | Mar 21, 2006 3:46:02 PM

Joseph: having correctly pointed out that there has been lots of studies of the effects of the employment regulation on employment levels, you managed not to cite a single academic peer-reviewed publication. The reference to a political hack job aka the publication by the International Labor Organization was particularly impressive.

Posted by: Kate Litvak | Mar 21, 2006 2:10:03 PM

There have been many studies of the practical effects on employment levels of the regulation of employment termination, and the evidence is mixed. A 1999 study by the Organization for Economic Co-operation and Development found no evidence that overall employment levels were affected by regulation of termination. See Hoyt Wheeler, Brian Klaas, and Douglas Mahony, Workplace Justice Without Unions (2004); M. Crotty, G. Davenport, P. Torres, A. Trebilcock, and M.L. Ruiz Vega, eds., Termination of Employment Digest (International Labor Organization, 2000).

Some argue that U.S. labor and employment laws are responsible for unemployment rates, currently lower in the U.S. than in Europe and Japan. But note that in the last few decades, there have been significant periods in which many European countries and Japan have had lower unemployment. So it is difficult to attribute these shifts to basically unchanging labor and employment law. See, e.g., William Corbett, Waiting for the Labor Law of the Twenty-First Century: Everything Old is New Again, 23 Berk. J. Of Emp. & Lab. L., 262 & n. 9.

Also, there are differences in types of restrictions on discharge. Matthew Finkin has argued that a just-cause requirement restricting disciplinary discharges does not have the negative employment effects that laws also restrict mass layoffs have.Matthew Finkin, Second Thoughts on a Restatement of Employment Law, 7 U. Pa. J. Lab. & Emp. L. 279, 282 (2005).

Finkin also argues that unfair dismissal laws can help to foster stable employment relationships, conducive to investment in human capital and cooperation.

Posted by: Joseph Slater | Mar 21, 2006 10:14:31 AM

I should add, it really depends on what you mean by "flexibility" (e.g. numerical or functional). The point is that America is not really all that flexible. Still, France may be too inflexible. Apparently, there is substantial empirical evidence that a certain "inflexibility" leads to macroeconomic stability and conversely too much "flexibility" leads to instability, which sucks for any economy, apparently.

You compare the employment figures of the young in France and America, but you might just as well point to the difference in poverty and healthcare relative to the overall GDP's of the respective nations - in other words, employment and GDP growth don't really tell you how well people live. And, it seems to me, people living well should be the goal of any national "economy." Considering how rich the US is as a nation, the levels of poverty here are something to be ashamed of. Seems to me we should be embarrassed rather than holding ourselves out as a model for other societies to emulate (see, e.g., New Orleans).

Posted by: a-train | Mar 20, 2006 7:09:37 PM

The causal relationship between the flexibility of the labor market and job creation is rather well-established in the economics literature.

Funny you should mention that:

"Economists often think that market flexibility is more efficient than market rigidity, but are they right? We know that the standard textbook version of labor market theory equates complete wage and employment flexibility with a set of optimal labor market results for both workers and employers. In such highly flexible and unregulated 'spot' labor markets, supply and demand are in equilibrium across all markets and economic efficiency, individual welfare, and profits are maximized."

"What is striking to any student of labor markets and employment relations, however, is how little support there is for such complete wage and employment flexibility among employers, workers, and unions, and how rare are the examples of such flexibility in modem economies. In the United States, for example, flexible wages, flexible employment, and high rates of labor mobility were prevalent in only two historical periods. One was at the beginning of American industrialization in the last half of the 19th century when employers were just beginning to internalize labor market functions within the firm, and when union density was less than 5%, strikes were often illegal, and workers lacked both employment rights and social welfare protections. The other was a brief period at the beginning of the Great Depression of the 1930s. More often, we observe widespread evidence of job stability, labor mobility that is confined to a limited set of jobs and workers, and persistent wage premiums above market wage rates."

See "Insider Efficiency and the Fallacy of Labor Market Flexibility" by Peter B. Doeringer.

Posted by: a-train | Mar 20, 2006 6:47:43 PM

Scott, these sorts of studies are done cross-sectionally across many countries, not within a single country as you are suggesting.

Posted by: Kate Litvak | Mar 20, 2006 6:40:12 PM

I don't know that the causal relationship between EAW and U.S. unemployment is terribly well-established, in part because the U.S. hasn't experimented much with deviating from employment at will ("EAW"). Sure, certain jobs are non-EAW -- some but not all union and governmental jobs -- but those jobs are in a skewed pool that may feature more unemployment for other, more significant reasons (e.g., lesser wage flexibility in union/public employment due to multi-year contracts or tougher union negotiating over wages, even at the expense of new jobs).

In fact, the one U.S. jurisdiction that has departed from EAW -- Montana -- does not appear to have suffered much or any uptick in unemployment. Since adopting its "Wrongful Discharge from Employment Act" in 1987, it has seen unemployment dip, not rise. Granted, that's partly because 1987 was a good year for employment nationally. But Montana's unemployment rose barely a jot in the 1990-91 recession, and it's never seen a spike in unemployment since then.

One always could argue, "but Montana's unemployment might be even lower if it hadn't passed this meddlesome statute." Given its already low unemployment, however -- below 5% since 2000, and recently below 4% -- how much could EAW possibly be suppressing employment?

So at the very least, there's a quite low upper bound to the possible negative effects that departing from EAW has had in the one U.S. jurisdiction that has tried it.

Posted by: Scott Moss | Mar 20, 2006 3:37:29 PM

The causal relationship between the flexibility of the labor market and job creation is rather well-established in the economics literature. The impact of letters "U" and "S" on job creation has not yet been suggested.

Posted by: Kate Litvak | Mar 20, 2006 3:24:10 PM

The U.S. is almost unique among advanced industrialized countries in having the letters "U" and "S" form its abbreviation. I'm not sure that's been proven to be the cause of its very low unemployment levels, however.

Posted by: Scott Moss | Mar 20, 2006 2:13:38 PM

The U.S. is almost unique among advanced industrialized countries in having very low unemployment levels, particularly among young workers.

Posted by: Kate Litvak | Mar 20, 2006 12:27:14 PM

The U.S. is almost unique among advanced industrialized countries in retaining the at-will presumption as the default.

Posted by: Joseph Slater | Mar 20, 2006 10:12:07 AM

In a great pamphlet called "The Law in Shambles," Thomas Geoghegan (Chicago labor lawyer) writes about (among other things) when he was teaching US labor law in Germany. The first day (as an aside) he talked about at-will employment. In each subsequent class he had to explain it all over. The students just couldn't believe it.

Posted by: a-train | Mar 18, 2006 1:01:52 PM

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