Languages, laws and labor contracts

Project Summary:

The decline in bargaining power for large groups of workers is at the core of rising inequality. This research aims to provide some of the first causal evidence that contractual language is not merely cheap talk but rather meaningfully shapes the decisions of contracting parties in the labor market. The grant will support an effort to digitize union contracts stored at the Kheel Center at Cornell University. In addition to digitization, the researchers will use language processing tools to extract norms, commitments, and entitlements from the text. The result will be a tool that can be used to understand the role of unions in the 20th century. The dataset will be uniquely detailed, including features of union contracts based on industry sector, union, firm, and year of the contract. The research questions that might be answered with the data range from the fundamental—How are labor contractual terms determined, and how do contractual terms affect workers and firms?—to the more subtle—How and why do contractual terms begin to reflect legal changes and judicial decisions?


W. Bentley MacLeod is Sami Mnaymneh Professor of Economics, Professor of International and Public Affairs, and an affiliated Law Faculty at Columbia University in the City of New York. He is a specialist in law, labor and contract economics, with a focus on how incentives are designed to take into account the complex interplay between reputation effects, market competition, and social norms. Current projects include incentives and school choice, the economics of contract and tort law, the economics of performance pay, and the economics of physician diagnostic choice.

His recent publications include “Reputation and School Choice,” American Economic Review, 2015, (with M. Urquiola); “Institutions and Contract Enforcement,” Journal of Labor Economics, 2015 (with A. Falk and D. Huffman); “Optimal Contracting in the Shadow of the Law,” Rand Journal of Economics, 2009 (with S. Chakravarty); “Performance Pay and Wage Inequality”, Quarterly Journal of Economics, 2009 (joint with T. Lemieux and D. Parent); “First Do Not Harm: Tort Reform and Birth Outcomes”, Quarterly Journal of Economics (2008) (with J. Currie); “Reputations, Relationships and Contract Enforcement”, Journal of Economics Literature (2007); and “Optimal Contracting with Subjective Evaluation,” American Economic Review (2003).

Bentley is the 1st Vice-President of the Society of Institutional and Organizational Economics (President in 2017), He is the recipient of the 2002 H. Gregg Lewis prize awarded by the Society of Labor Economists for his article “Worker Cooperation and the Ratchet” with H. Lorne Carmichael and is a fellow of the Econometric Society since 2005. Fellow of the Society of Labor Economists since 2012. His teaching career begun with a two year stint teaching mathematics and physics at Okundi Secondary School in Nigeria, an experience that led to his interest in economics in order to understand the large variations national economic performance. After completing his PhD in economics, he has taught at Queen's University, Université de Montréal, Boston College, University of Southern California, California Institute of Technology and Princeton University, before coming to Columbia University. He has held one year visiting positions at CORE, Belgium, IAE, Barcelona, Russell Sage Foundation, New York and The Institute for Advanced Studies, Princeton, NJ.