The Structure of American Legal Institutions and the Diffusion of Wrongful-Discharge Laws, 1978-99

Abstract

This article evaluates how the social structure of American legal institutions influenced the diffusion of wrongful-discharge laws over the period from 1978-1999 and assesses whether economic or political variables influenced the diffusion process. The results are surprising and quite striking. Precedents by other courts within the same federal circuit region were generally more influential in the diffusion process than precedents by courts in neighboring states or by courts within the same census or West legal reporting region, even though the precedents were on matters of state law rather than federal law and the decisions were usually made by state courts rather than federal courts. There is some evidence that political variables may also have been a factor, but economic variables did not appear to be particularly important, even though the new employment laws may have had important economic consequences.

Keywords: Employment-at-Will, Wrongful-Discharge, Social Networks, Legal Precedents, Network Effects

JEL Classification: K12, K31, K40