The Law and Economics of Agreements to Arbitrate Employment Claims

40 Pages Posted: 30 Aug 2000

See all articles by Keith N. Hylton

Keith N. Hylton

Boston University - School of Law

Date Written: June 2000

Abstract

This paper presents an economic analysis of arbitration agreements in the employment context. The goal of this analysis is first to set out, clarify, and illuminate the economics of waiver and arbitration agreements in the employment context. The fundamental economic benefits from employment arbitration can be placed in either of two categories: deterrence benefits and dispute-resolution cost savings. Arbitration enhances the deterrence benefit to the extent that it encourages greater compliance with legal and contractual employment norms. Arbitration obviously has the potential to reduce dispute resolution costs by adopting less formal mechanisms. The second goal of this analysis is to answer the normative question, should predispute arbitration agreements be enforced? I conclude they should be enforced, provided the employee has knowingly and voluntarily waived his rights.

JEL Classification: K31, K41

Suggested Citation

Hylton, Keith N., The Law and Economics of Agreements to Arbitrate Employment Claims (June 2000). Available at SSRN: https://ssrn.com/abstract=239329 or http://dx.doi.org/10.2139/ssrn.239329

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

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