This paper summarizes the results of nearly a dozen new papers presented at the Sundance Conference on Monopsony in Labor Markets held in October 2018. These papers, to be published as a special issue of the Journal of Human Resources, study various aspects of monopsony and failures of competition in labor markets. It also reports on the new developments in public policies associated with widespread concerns about labor market competition and efforts to ameliorate competitive failures. The conference papers range from studies of the labor supply elasticity individual firms face to studies of local labor market concentration to studies of explicit covenants suppressing labor market competition. New policies range from private and public antitrust litigation to concerns about the effect of mergers and inter-firm agreements on labor market competition. We provide a detailed discussion of the mechanics of the Silicon Valley High Tech Worker conspiracy to suppress competition based on Court documents in the case. Non-compete agreements, which are not enforceable in three states already, have also come under scrutiny.
A central feature of the litigation process that affects case outcomes is the selection of
cases for litigation. In this study, we present a theoretical framework for understanding the
operation of this suit selection process and its relationship to the underlying distribution
of potential claims and claimants. We implement the model empirically by assuming that
individuals vary more in their litigiousness (inverse costs of litigation) than do corporations.
This assumption, coupled with the case selection process we present, yields clear predictions
on trial rates as a function of whether the plaintiff and defendant were individuals or
corporations. The model also yields a prediction on the plaintiff ’s win rate in lawsuits as
a function of the plaintiff ’s identity. Our empirical analysis, using data on over 200,000
federal civil litigations, yields results that are generally consistent with the theory. Lawsuits
where the plaintiff is an individual are found to have higher trial rates and lower plaintiff
In this study we examine the experience of a single large hospital with an
informal pre-litigation “complaint” process that resolves some cases outside of the legal
system. The empirical results are generally consistent with an information structure where
patients are poorly informed about the quality of medical care and the hospital does not
know whether particular patients are litigious or not. The complaint process seems to
resolve many complaints in a less costly manner than ﬁling lawsuits. Almost half of all
complaints are resolved before a lawsuit is ﬁled. The large majority of these are dropped,
and they are cases that would likely have been dropped even if they had been initiated as
lawsuits. Very few cases are settled with a cash payment to patients before a lawsuit is
ﬁled, suggesting that patients must ﬁle lawsuits in order to convince the hospital that they
are litigious enough to justify a settlement. Cases initiated through the complaint process
are not resolved (dropped, settled, tried to a verdict) signiﬁcantly differently from cases
initiated as lawsuits, controlling for observable case characteristics. When settlements
of lawsuits occur, the amounts paid do not vary depending on how the case originated,
but settlements of complaints are much higher for cases settled after a lawsuit is ﬁled.
We conclude that the complaint process is a cost-effective “front-end” for the litigation
process that provides information to patients regarding the quality of their medical care
and, hence, the likelihood of negligence.
Three central facts describe inter-ﬁrm worker mobility in modern labor mar-
kets: 1) long-term employment relationships are common, 2) most new jobs end early,
and 3) the probability of a job ending declines with tenure. Models based on ﬁrm-speciﬁc
capital provide a parsimonious explanation for these facts, but it also appears that worker
heterogeneity in mobility rates can account for much of what we observe in these data. I
investigate tests of the speciﬁc capital model and consider whether these tests are success-
ful in distinguishing the speciﬁc capital model from a model based on heterogeneity. One
approach uses longitudinal data with detailed mobility histories of workers. These analyses
suggest that both heterogeneity and speciﬁc capital (implying true duration dependence
in the hazard of job ending) appear to be signiﬁcant factors in accounting for mobil-
ity patterns. A second approach is through estimation of the return to tenure in earnings
functions. This is found to have several weaknesses including endogeneity of tenure and the
lack of tight theoretical links between tenure and accumulated speciﬁc capital and between
productivity and wages. A third approach is to use of data on the earnings experience of
displaced workers. Several tests are derived based on these data, but there is generally an
alternative heterogeneity-based explanation that makes interpretation difficult. Nonethe-
less, ﬁrms appear willing to pay to encourage long-term employment relationships, and
they may do so because it is efﬁcient to invest in their workforce. On this basis, I conclude
that, while deriving convincing direct evidence for the specific capital model of mobility
is difficult, it appears that speciﬁc capital is a useful construct for understanding worker
mobility and wage dynamics.
We test for the presence of an addictive effect of arbitration
(positive state dependence) using data both from a laboratory bargaining
experiment and from the field. We find no evidence of state dependence in
the experimental data, and we find weak evidence of positive state dependence
in the field data on teachers in British Columbia. Hence, we reject the view
that use of arbitration per se leads to state dependence either through
reducing uncertainty about the arbitral process or through changing the
bargaining parties perceptions about their opponents. The results further
suggest that an explanation for any positive state dependence we find in the
British Columbia field data must lie in an aspect of the arbitration process
which is not captured by our simple experimental design.
The central claim of a rapidly growing literature in international relations is that members
of pairs of democratic states are much less likely to engage each other in war or in serious
disputes short of war than are members of other pairs of states.
Our analysis does not support this claim. Instead, we ﬁnd that the dispute rate between
democracies is lower than is that of other country pairs only after World War H. Before 1914
and between the World Wars, there is no difference between the war rates of members of
democratic pairs of states and those of members of other pairs of states. We also find that there
is a higher incidence of serious disputes short of war between democracies than between
nondemocracies before 1914.
We attribute this cross-temporal variation in dispute rates to changes in patterns of
common and conflicting interests across time. We use alliances as an indicator of common
interests to show that cross-temporal variation in dispute rates conforms to variations in interest
patterns for two of the three time periods in our sample.
Multiple studies find that plaintiffs who lose at trial and subsequently appeal are less successful on appeal than are losing defendants who appeal. The studies attribute this to a perception by appellate judges that trial courts are biased in favor of plaintiffs. However, at least two alternative explanations exist. First, losing plaintiffs may appeal at higher rates independent of the potential merits. Second, if plaintiffs tend to pursue to trial lawsuits where they should win on the merits less than half the time, then errors at trial will be more likely to adversely affect defendants. This study revisits the analysis of the appellate process with a theoretical model that has implications not only for appellate outcomes but for the rate of appeal. By tying together win rates at trial, appeals rates, and success rates on appeal, the model can distinguish the competing explanations for differential appellate success rates. We estimate this model using matched data on Federal District Court trials and appeals to the U. S. Circuit Courts of Appeal. We provide evidence that the lower plaintiff success rate on appeal is due to plaintiffs' pursuing lawsuits where they should win on the merits (which we define to be an outcome that will not be reversed or remanded on appeal) less than half the time. We also provide evidence against explaining asymmetric success on appeal being attributable to trial courts favoring plaintiffs and evidence against juries being favorable to plaintiffs compared to judges.