Are Judges Sensitive to Economic Conditions? Evidence from UK Employment Tribunals
The author investigates whether judges deciding on unfair dismissal cases are sensitive to economic conditions faced by workers and firms. Using the 1992 survey of Employment Tribunal Applications in Great Britain and controlling for case selection, she finds that both the unemployment and the bankruptcy rates significantly decrease the probability of judges deciding in favor of dismissed employees. A one-point increase in the unemployment rate leads to a seven-point decrease in this probability; this effect, however, is not significant for unemployed workers. These findings are consistent with the idea that judges, while tailoring firing costs to economic circumstances, are somewhat more sensitive to firms’ interests.