Labor Seminars Amsterdam

Chris Woodruff (Oxford Univeristy, Untied Kingdom)
Tuesday, 5 December 2017

Labor courts are essential for the well-functioning labor markets and provision of justice, but function poorly in developing countries. We use data from administrative records and surveys of parties to lawsuits in a Mexico City Labor Court to document that parties over- confident about winning their case and workers are particularly misinformed. An analytical framework shows the conditions under which provision of information on predicted outcomes to the parties is likely to be effective and welfare-improving. We then conduct an experiment providing parties with predicted outcomes for their case or access to a conciliator. The infor- mation nearly doubles the overall settlement rate, but only when the suing worker is present to receive it. Providing information only to lawyers has no effect. We also find some evidence that the information causes updating. The results replicate in a scale up to 5 more courts, showing robustness. Joint with Joyce Sadka and Enrique Seira.