Improving Labor Courts: The Effects of Publicly Provided Lawyers and Statistical Information
Labor courts are essential for well-functioning labor markets and the provision of justice. In Mexico, labor courts are characterized by long delays in trials, low settlement rates, misinformation and overconfidence among plaintiffs, and lawsuit inflation. We aim to understand the extent to which these problems are caused by principal-agent issues between plaintiffs and private lawyers, and if they can be mitigated by 2 interventions: (1) encouragement to consult with (free) public lawyers, who have lower incentives to inflate expectations, and, (2) the provision of personalized statistical predictions of expected case outcomes as well as legally-mandated entitlements. We work with a sample of plaintiffs coming to the court before retaining a lawyer or filing a case. We measure the effect of treatment on pre-trial settlement rates, case duration and the amounts won by plaintiffs. We also measure lawsuit quality, expectations of parties about winnings, post-case satisfaction, and measures of consumption and employment.