Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing

54 Pages Posted: 24 Sep 2001

See all articles by David H. Autor

David H. Autor

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

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Date Written: August 2001

Abstract

Over the past three decades, the U.S. Temporary Help Services (THS) industry grew five times more rapidly than overall employment. Contemporaneously, courts in 46 states adopted exceptions to the common law doctrine of employment at will that limited employers' discretion to terminate workers and opened them to litigation. This paper assesses the contribution of "unjust dismissal" doctrine to THS employment and finds that it is substantial - explaining 20 percent of the growth of THS between 1973 and 1995 and contributing a half million workers to THS in 2000. States with smaller declines in unionization also saw substantially more THS growth.

Keywords: Temporary Help Employment, Contingent Work Arrangements, Employment Outsourcing, Wrongful Discharge Law, Employment Protection, Nonwage Labor Costs, Labor Unions, Contracts: Specific Human Capital

JEL Classification: J24, J32, J41, K31, L22

Suggested Citation

Autor, David H., Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing (August 2001). Available at SSRN: https://ssrn.com/abstract=281418 or http://dx.doi.org/10.2139/ssrn.281418

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