We are grateful to Foote and Goetz for noting that the final table of Donohue and Levitt (Quarterly Journal of Economics, 116 (2001), 379–420) inadvertently omitted state-year interactions. Correcting our mistake does not alter the sign or statistical significance of our estimates, although it does reduce their magnitude. Using a more carefully constructed measure of abortion that better links birth cohorts to abortion exposure (by using abortion data by state of residence rather than of occurrence, by adjusting for cross-state mobility, and by more precisely estimating birth years from age of arrest data), we present new evidence that abortion legalization reduces crime through both a cohort-size and a selection effect.

In economics, the standard mechanism for allocating scarce resources is the market. A smoothly functioning market, however, is built upon legally enforceable contracts and property rights. In the absence of law, it is likely that violence (or the threat thereof), rather than prices, is the means by which resources will be allocated. Interactions among animals provide clear evidence for this claim. Dominance hierarchies based on fighting ability, also sometimes known as pecking orders, have been documented across a wide variety of species (e.g., primates, chickens and other birds, reptiles, lobsters) and a broad range of resources including food, nesting sites, and access to mates (Warder C. Allee, 1938; John Alcock, 1993). Evidence suggests that violence also plays a critical role in human interactions when property rights are not legally enforceable (e.g., drug dealing and extortion) (see e.g., Peter Reuter, 1983; Geoffrey Canada, 1995). In this paper, we analyze the determinants of the efficiency with which illegal markets allocate scarce resources. We develop a stylized model in which players compete for a fixed prize, with the winner determined by fighting ability. Efficiency in this context is determined by the amount of resources spent on fighting. Two factors affecting efficiency emerge from the model: lethality and predictability. Perhaps surprisingly, the use of more lethal mechanisms for resolving disputes does not have a clear impact on the social costs of violence. The intuition underlying this result is that, as the costs of losing a fight rise, the willingness to fight falls. We show that holding other factors constant, the resources spent on fighting are lowest when the cost of losing is either very low or very high (e.g., nuclear deterrence), but over a wide range of lethality levels, the overall social costs of fighting are fairly stable. In contrast, the costs of violence are critically linked to the predictability of dispute outcomes (i.e. the certainty with which potential combatants know who will be victorious ex ante). When the outcome of a conflict is highly correlated with observable characteristics such as strength or size, there is little need to actually fight. Thus unpredictability, all else equal, increases the expected payoff to fighting for the lower-ranked member, leading to more conflicts.

We estimate the effects on employment and wages of wrongful-discharge protections adopted by U.S. state courts during the last three decades. We find robust evidence that one wrongful-discharge doctrine, the implied-contract exception, reduced state employment rates by 0.8% to 1.7%. The initial impact is largest for female and less-educated workers (those who change jobs frequently), while the longer-term effect is greater for older and more-educated workers (those most likely to litigate). By contrast, we find no robust employment or wage effects of two other widely recognized wrongful-discharge laws: the public-policy and goodfaith exceptions.

The Employment Consequences of Wrongful-Discharge Laws: Large, Small, or None at All? by David H. Autor, John J. Donohue and Stewart J. Schwab. Published in volume 94, issue 2, pages 440-446 of American Economic Review, May 2004