Eco 490, Haskell Spring 2022
Assignment – Replication of Autor (2003)
Due on Thursday, Fe
uary 17th, at the start of class.
Assignment
1. Replicate Table 3, columns (1), (3), (5), and (7)
2. Replicate Table 5, column (5)
3. Use the data to test one extension of the paper that you find interesting.
Create 1-2 slides with your question and the results of your analysis to share
with the class on March 9th.
Guidelines
➢ Results should be submitted as formatted tables in a Word document.
➢ Submit via Dropbox on Isidore:
a) Your Word document with formatted tables
) Your STATA code (.do files) for the replication and the extension
c) Your slides with results from the extension.
**Note, each group member must submit their own code and replicated
tables. You may, however, submit one set of slides for the entire group. All
materials are due at the start of class on the specified due date.
➢ Bring to class:
a) An electronic copy of your slides
Necessary Materials on Isidore under “Lessons” and “Replication Assignment”:
Data: autor-jole-2003.dta
Obs: 1200
Vars: 34
Eco 490, Haskell Spring 2022
VARIABLE DESCRIPTION
state CPS state code
year 2-digit year
hsg High school graduate
smc Some college
clg College grad
gtc Greater than college
s_wm White male
s_wf White female
s_bm Black male
s_bf Black female
s_om Other race male
s_of XXXXXXXXXXOther race female
m XXXXXXXXXXMale age 16-19
m2024 Male age 20-24
m XXXXXXXXXXMale age 25-54
m XXXXXXXXXXMale age 55-64
m65up Male 65 and up
f1619 Female age 16-19
f2024 Female age 20-24
f2554 Female age 25-54
f5564 Female age 55-64
f65up Female 65 and up
unmem Union Membership
marfem Ma
ied and female
marmale Ma
ied and male
stateemp State total employment
peremp Personnel services employment
svcemp XXXXXXXXXXAll service employment - personnel employment
lnths ln THS employment
mico Adoption of “Implied Contract” Exception to Common Law
mppa XXXXXXXXXXAdoption of Public Policy Exception to Common Law
mgfa XXXXXXXXXXAdoption of Good Faith Exception to Common Law
annemp Total state non-farm employment
egion Region (1= New England, 2= Mid Atlantic, 3=East North Central,
4=West North Central, 5=South Atlantic, 6=East South Central
7=West South Central, 8=Mountain, 9=Pacific)
Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing
1
[ Journal of Labor Economics, 2003, vol. 21, no. 1]
� 2003 by The University of Chicago. All rights reserved.
0734-306X/2003/ XXXXXXXXXX$10.00
Outsourcing at Will: The Contribution
of Unjust Dismissal Doctrine to the
Growth of Employment Outsourcing
David H. Autor, Massachusetts Institute of Technology and
the National Bureau of Economic Research
Over the past 3 decades, the U.S. Temporary Help Services (THS)
industry grew five times more rapidly than overall employment. Con-
temporaneously, courts in 46 states adopted exceptions to the com-
mon law doctrine of employment at will that limited employers’
discretion to terminate workers and opened them to litigation. This
article assesses the contribution of “unjust dismissal” doctrine to THS
employment specifically, and outsourcing more generally, finding that
it is substantial—explaining 20% of the growth of THS between 1973
and 1995 and contributing 500,000 additional outsourced workers in
2000. States with smaller declines in unionization also saw substan-
tially more THS growth.
Between 1979 and 1995, the Temporary Help Supply (THS) industry in
the United States grew at 11% annually—over five times more rapidly
This article was previously titled “Outsourcing at Will: Unjust Dismissal Doc-
trine and the Growth of Temporary Help Employment.” I am indebted to Daron
Acemoglu, Joshua Angrist, John Donohue III, Edward Glaeser, Susan Houseman,
Alan Hyde, John H. Johnson III, Lawrence Katz, Sendhil Mullainathan, Andrew
Mo
iss, Richard Murnane, Stewart Schwab, Douglas Staiger, and Marika Tatsutani
for valuable suggestions, and to Ba
y Guryan of Epstein, Becker, and Green fo
expert legal counsel. I also thank seminar participants at University of California,
Berkeley, Brown University, Harvard University, the Massachusetts Institute of
Technology, the National Bureau of Economic Research Labor Studies workshop,
the University of Maryland, and the 2000 Econometrics Society meeting for thei
comments.
This content downloaded from XXXXXXXXXXon Fe
uary 01, XXXXXXXXXX:59:15 AM
All use subject to University of Chicago Press Terms and Conditions (http:
www.journals.uchicago.edu/t-and-c).
0003
Highlight
2 Auto
Table 1
THS Employment by Geographic Region and Year, 1979–2000: Employed
Workers (1,000s) and Percentage of Nonfarm Employment
Northeast
(9 States)
(%)
Midwest
(12 States)
(%)
South
(16 States)
(%)
West
(13 States)
(%)
Total
(50 States)
(%)
XXXXXXXXXX
.66
104.4
.51
104.9
.46
109.1
.78%
432.9
.58
XXXXXXXXXX
.65
75.8
.42
112.0
.48
97.1
.69
396.0
.55
XXXXXXXXXX
1.00
188.5
.90
234.2
.86
172.4
1.01
794.1
.93
XXXXXXXXXX
1.02
280.3
1.22
480.8
1.61
260.6
1.36
1,225.2
1.33
XXXXXXXXXX
1.73
571.0
2.12
970.1
2.87
495.5
2.42
2,388.9
2.39
2000 3,887.0
2.95
Sources.—County Business Patterns, 1979–95; Bureau of Labor Statistics National Employment,
Hours, and Earnings, available at http:
www.bls.gov.
Note.—Percentage of nonfarm employment appears below employment count.
than U.S. nonfarm employment—and increased its daily head count from
435,000 to 2.4 million workers (table 1). During these same years, what
many have termed a revolution in jurisprudence toward worker dismissal
occu
ed as U.S. state courts recognized exceptions to the common law
doctrine of employment at will. That doctrine, which had been recognized
throughout the United States by 1953, held that employers and employees
have unlimited discretion to terminate their employment relationships at
any time for any reason unless explicitly contracted otherwise. The rec-
ognition of exceptions to employment at will by 46 state courts between
1973 and 1995 limited employers’ discretion to terminate workers and
opened them to potentially costly litigation.1 This article assesses whethe
these contemporaneous phenomena—the erosion of employment at will
and the rapid growth of THS—are causally related. More generally, the
article answers the question of whether changes to the legal environment
su
ounding worker dismissal are in part responsible for the growth of
“contingent” work a
angements in the U.S. economy, the most promi-
nent example of which is temporary help employment. The answer ap-
pears to be yes.
The analysis proceeds as follows: Section I introduces the three classes
of common law exception to the at-will doctrine, evaluates their impli-
1 Of course, employers’ power to terminate at will has not been absolute fo
some time. Major pieces of federal legislation that protect the employment rights
of minorities, union members, persons over the age of 40, and persons with
disabilities include Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the National Labor Relations Act, the Age Discrimination in Employ-
ment Act of 1967, and the Americans with Disabilities Act of 1992.
This content downloaded from XXXXXXXXXXon Fe
uary 01, XXXXXXXXXX:59:15 AM
All use subject to University of Chicago Press Terms and Conditions (http:
www.journals.uchicago.edu/t-and-c).
Outsourcing at Will 3
cations for THS and other “outsourced” employment, and concludes that
one exception in particular—the implied contractual right to continued
employment (“implied contract”)—provides a compelling incentive fo
firms to utilize temporary help workers. Section II considers a simple
model of employment outsourcing in the presence of positive firing costs.
The key implication of the model is that employers are likely to respond
to mandated firing costs by outsourcing jobs that require limited firm-
specific capital, an implication that aptly describes the occupations typ-
ically supplied by THS. Section III describes the data and empirical strat-
egy, and Section IV provides empirical results. Section V concludes.
A key finding of the present analysis is that state courts’ adoption of
the implied contract doctrine has resulted in approximately 22% excess
temporary help employment growth in adopting states. In addition, states
experiencing smaller declines in unionization saw substantially greate
THS growth. Unjust dismissal doctrines did not significantly contribute
to employment growth in other business service industries, however. In
net, the results indicate that changes to the employment-at-will doctrine
explain as much as 20% of the growth of THS between 1973 and 1995
and account for 365,000–530,000 additional workers employed in THS
on a daily basis as of 2000.
The present analysis is related to empirical analyses by Dertouzos and
Karoly (1992), Mo
iss (1995), Kugler and Saint-Paul (2000), and Autor,
Donohue, and Schwab (2001), who explore the impacts of unjust dismissal
doctrine on overall employment levels and growth, job termination prob-
abilities, and job-to-job flows; to recent work evaluating the impacts of
civil rights legislation on the employment of the disabled (DeLeire 2000;
Acemoglu and Angrist 2001) and minorities (Donohue and Heckman
1991; Oyer and Schaefer 2000, 2002); and to research on the impact of
labor-market flexibility on labor force participation, employment, and
unemployment in countries in the Organization for Economic Cooper-
ation and Development (OECD; Lazear 1990; Di Tella and MacCulloch
1998; Blanchard and Portugal XXXXXXXXXXMo
iss XXXXXXXXXXoffers a thorough
eview of case law affecting employment at will, Epstein XXXXXXXXXXpresents
the major legal and economic arguments supporting the at-will doctrine,
Segal and Sullivan (1997a) provide a comprehensive discussion of the
growth of THS, and A
aham and Taylor XXXXXXXXXXand Houseman (2001)
provide insightful analyses of the determinants of firms’ use of flexible
staffing a
angements.
The unique contribution of the cu
ent study is to explore theoretically
and empirically the impact that unjust dismissal doctrine has had on em-
ployment outsourcing. Lee XXXXXXXXXXand Segal and Sullivan (1997a) suggest
a possible causal connection between the growth of THS and the decline
of employment at will but