The Economic Costs of Court Decisions Concerning Dismissals in Japan: Identification by Judge Transfers

45 Pages Posted: 9 Apr 2009 Last revised: 5 Oct 2015

Date Written: September 7, 2015

Abstract

Despite its significant influence on the actual enforcement of the law, the economic cost of court discretion has been ignored in the literature on employment protection. This paper exploits a distinctive feature of the Japanese judicial system, periodic judge transfers, to identify court discretion. Because judges move across local labor markets while a single national court system ensures that there are no legal boundaries between regions, it is possible to shut down any confounding relationships between current litigation outcomes and local labor market. A key finding is that an increase in the worker victory ratio in adjustment dismissal litigations in the last 10 years reduces rates of both job creation and destruction. Ignoring the uncertainty inherent in court decisions would lead to misspecification of the actual cost of employment protection, especially in countries with high judicial activism.

Keywords: Employment protection, law enforcement, judge effects, many instruments

JEL Classification: J65, K31, K42

Suggested Citation

Okudaira, Hiroko, The Economic Costs of Court Decisions Concerning Dismissals in Japan: Identification by Judge Transfers (September 7, 2015). ISER Discussion Paper No. 733, Available at SSRN: https://ssrn.com/abstract=1371934 or http://dx.doi.org/10.2139/ssrn.1371934

Hiroko Okudaira (Contact Author)

Okayama University ( email )

2-1-1, Tsushimanaka, Okayama-shi
Okayama
Japan
+81-86-251-7542 (Phone)
+81-86-251-7542 (Fax)

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
114
Abstract Views
781
rank
327,276
PlumX Metrics