23
Endnotes
1. Although it is as well to point out that the plethora of state bills seeking to restrict
outsourcing (usually by banning the state from contracting with companies planning to
employ offshore workers) would, if passed, likely succumb to legal challenge under the
U.S. constitution on the grounds that they violate the Foreign Commerce Clause (Art. 1,
§8, cl. 3). This clause restricts the states’ power to interfere with interstate or foreign
commerce. By the same token, even if never enacted into law such bills may already
have had a chilling effect on the growth of IT outsourcing by local and state
governments.
2. On the issue of worker rents in the regulated trucking and airline industries, see Hirsch
and Macpherson (1998, 2000).
3. On the competing interests involved in environmental protection per se and the effects
of regulation on factor shares and the size distribution of firms, see Pashigian (1984,
1985).
4. As a practical matter, the authors combine the compliance costs of OSHA with those
of the EPA, or, more accurately, assume that the two have the same proportional
relationship throughout. This has to be kept in mind in what follows.
5. I have neglected the issue of import competition. This study does include a measure of
import penetration and reports that firms facing strong competitive pressures from
imports are badly hurt by regulation. Specifically, where the value of industry net imports
to shipments is at its maximum value of 40 percent, the effect of regulation is reduce
profits by one half.
6. Violations of the public policy and good faith doctrines are actionable irrespective of
the identity of the employer, while staffing arrangements (such as temporary help) cannot
be used to shield firms from civil rights compliance. So there are no advantages to
temporary employment here. Only the implied contract exception offers relief in so far as
THS employment is ipso facto temporary (other than for the line staff of the temporary
employment agency itself).
7. The main part of Autor, Donahue, and Schwab’s (2001) study is an analysis of the
effect of the public policy, implied contract, and good faith exceptions upon state
employment and wages, using data from the CPS monthly files, 1978-1999. Inconsistent