Document Type

Article

Publication Title

Michigan Law Review

Abstract

In this article, we take an approach fundamentally different from that of the labor law commentators. We start from a broader perspective than is common: successorship is as important an issue for corporate law as it is for labor law. Given that the two principal inputs to the firm are labor and capital, it would be surprising if the laws for labor law successorship were completely different from the laws for corporate law successorship. To the extent that differences exist, those differences should hinge upon differences between the employees' and the creditors' relationships with the firm. What distinguishes the employees' relationship from that of others who contract with the firm is what economists term the "internal labor market" - the ongoing web of contractual and noncontractual understandings governing the employer-employee relationship which, when efficient, yields a surplus above that available in the external labor market. In this article, we show that internal-labor-market theory provides the element that the cases and the commentary have most lacked: a positive theory of labor law successorship. To the extent that one believes that courts should help parties maximize their joint gains, at least when doing so imposes no costs on others, the economics of internal labor markets provides a normative theory as well.

First Page

203

DOI

https://doi.org/10.2307/1289666

Volume

92

Publication Date

1993

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