The (Other) Effects of Restricting Access to Higher Courts: The Case of Wrongful Terminations in Labor Contracts in Chile

65 Pages Posted: 23 Jan 2020

See all articles by Álvaro E. Bustos

Álvaro E. Bustos

Pontificia Universidad Catolica de Chile

Pablo Bravo-Hurtado

Maastricht University, Faculty of Law, Students

Antonio Aninat

Pontifical Catholic University of Chile

Date Written: December 2019

Abstract

It is commonly argued that the case overload faced by higher courts (especially in civil law) can be reduced by restricting access to them. In this paper we prove that such restriction can also significantly reduce judicial uniformity among lower courts and alter litigation decisions as well as outcomes. To test our predictions we build a database of wrongful termination lawsuits that took place before and after the implementation of a reform to the Chilean labor justice system. This reform exogenously and drastically reduced access to higher courts. As we predict, this reduction increased the probability of a first-instance pro-plaintiff decision (by 36%); increased the percentage recovered by a plaintiff in court (by 27%) and reduced the probability of a settlement (by 16%). The Priest & Klein 50% hypothesis suggests that prior to the reform plaintiffs recovered too little. Policy implications follow.

Keywords: higher courts, access to appeal, judicial rationality, labor procedure, judicial uniformity, Chile, Priest and Klein

JEL Classification: K10, K31, K41

Suggested Citation

Bustos, Álvaro E. and Bravo-Hurtado, Pablo and Aninat, Antonio, The (Other) Effects of Restricting Access to Higher Courts: The Case of Wrongful Terminations in Labor Contracts in Chile (December 2019). Available at SSRN: https://ssrn.com/abstract=3512589 or http://dx.doi.org/10.2139/ssrn.3512589

Álvaro E. Bustos (Contact Author)

Pontificia Universidad Catolica de Chile ( email )

Vicuna Mackena 4860. Macul
Santiago
Chile

HOME PAGE: http://https://sites.google.com/site/20bustos13/

Pablo Bravo-Hurtado

Maastricht University, Faculty of Law, Students ( email )

Maastricht
Netherlands

Antonio Aninat

Pontifical Catholic University of Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile

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