Language, Laws, and Labor Contracts in the 20th Century


Suresh Naidu
Professor of International and Public Affairs and Economics
Bentley MacLeod
Sami Mnaymneh Professor of Economics and Professor of International and Public Affairs


This research will contribute to our understanding of how firms and workers allocate authority, and how this can be organized to increase productivity and reduce conflict. These questions go back to Ronald Coase and Herbert Simon, as well as the institutionalist school of labor economics. Outside of economics, our results will relate to the large literature in labor and legal history, sociology, and American political development that has concerned itself with the role of the law in the labor contract. Our new integrated data set of labor laws and labor contracts will be of value to both qualitative and quantitative researchers interested in computational linguistics, contracts, law, and the history of U.S. labor unions in the 20th century. The productivity gains associated with successful firm-worker relationships rely not only on the terms of written agreements, but also on the background legal institutions that interpret, enforce, and elaborate such agreements. The purpose of this research is to explore the complementary roles of laws and contracts through the construction and analysis of a new data set on collective bargaining agreements. After merging the contract data with data on laws and firms, we use natural language processing tools to extract those textual features of statutes, court cases, and contracts that matter for economic outcomes. We then address two central questions. First, does the law affect written contracts? Second, do contracts affect economic performance?