Exceptions to Employment at Will: Raising Firing Costs or Enforcing Life-Cycle Contracts?

The common law doctrine of employment at will holds that, unlessspecified otherwise, the employment relationship can be terminatedfor any reason. Beginning in the mid-1970s, many state courtsbecame willing to find exceptions to this doctrine. A possiblebenefit of this new approach is that it provides a third-partyenforcement mechanism to implicit labor contracts. This articleuses two large micro data sets on employee tenure and wagesto evaluate the impact of exceptions to employment at will.Although the results suggest that exceptions to employment atwill affected labor markets, there is little evidence that exceptionshelped enforce implicit contracts.     

Experimental Evidence on the Effect of Childhood Investments on Postsecondary Attainment and Degree Completion

This paper examines the effect of early childhood investments on college enrollment and degree completion. We used the random assignment in Project STAR (the Tennessee Student/Teacher Achievement Ratio experiment) to estimate the effect of smaller classes in primary school on college entry, college choice, and degree completion. We improve on existing work in this area with unusually detailed data on college enrollment spells and the previously unexplored outcome of college degree completion. We found that assignment to a small class increases students’ probability of attending college by 2.7 percentage points, with effects more than twice as large among black students. Among students enrolled in the poorest third of schools, the effect is 7.3 percentage points. Smaller classes increased the likelihood of earning a college degree by 1.6 percentage points and shifted students toward high‐earning fields such as STEM (science, technology, engineering, and mathematics), business, and economics. We found that test‐score effects at the time of the experiment were an excellent predictor of long‐term improvements in postsecondary outcomes.