Litigation Costs and Returns to Experience

摘要

We develop a model linking maximum damage awards available to plaintiffs in wrongful termination lawsutis, workers' propensity to sue as a function of experi- ence, and returns to experience. Using Equal Employment Opportunity Commission data on protected-worker discrimination complaints and labor-market data from the Current Population Survey, we examine how returns to experience among protected workers changed around the passage of the Civil Rights Act of 1991. We show that employers' reactions to employment protections may induce redistributive effects.