Litigation and Settlement: New Evidence from Labor Courts in Mexico


  • We thank Tatiana Carrera, Fernando Espino, Helena Garcia, Oscar Sanchez, Pedro Struck, Antonina Tarassiouk, Lorelen Urioste, and Carlos Zafra for research assistance. Financial support from the Asociación Mexicana de Cultura, the Conferencia Interamericana de Seguridad Social, and the Inter-American Development Bank is gratefully acknowledged.

*Joyce Sadka, Camino a Sta. Teresa #930. México, D.F., C.P. 10700, Mexico; email: Kaplan is with the World Bank and Instituto Tecnológico Autónomo de México; Sadka is with Centro de Investigación Económica, Department of Economics, Instituto Tecnológico Autónomo de México; Silva-Mendez is at Stanford Law School.


Using a newly assembled data set on procedures filed in Mexican labor tribunals, we study the determinants of final awards to workers. On average, workers recover less than 30 percent of their claim. Our strongest result is that workers receive higher percentages of their claims in settlements than in trial judgments. We also find that cases with multiple claimants against a single firm are less likely to be settled, which partially explains why workers involved in these procedures receive lower percentages of their claims. Finally, we find evidence that a worker who exaggerates his or her claim is less likely to settle.