The diffusion of judicially provided employment protection: the employment-at-will doctrine

Abstract

Labour economists in the private sector of the United States have historically expressed concerns that private-sector employers too often terminate employees' employment without just cause. Because the USA lakes statutory restrictions against such actions, many state judicial branches seem to have taken a leading role in providing some degree of employment security. The present note tests the ‘intensity’ of the occurrence (across states) of judicially provided employment protection, as a function of several demographic, labour and political variables across states. The maximum likelihood tobit results point out that education attainment of the voting population, the current rate of unemployment, and population density of the state are important factors that lead judicial branches of government (across states) to provide such protection at different points in time. The note supports several findings of a previous study by Kesselring and Pittman (1993) which models the dependent variable as a zero/one dummy variable(not a measure of intensity). However, several findings from the Kesserling–Pittman study are reversed when modelled with a dependent variable that attempts to measure the diffusion of judicial protection.