Judicial lawmaking in a civil law system: Evidence from German labor courts of appeal

According to economic analysis, common-law courts resolve individual legal disputes and create new, judge-made law. In this article, I study both functions in a civil-law context by analyzing data for nine German labor courts of appeal (Landesarbeitsgerichte) in the period 1980-1996. Output of these courts is measured by the number of resolved cases, settlements, and published opinions. Performance in each of these measures depends on judges' incentives and external factors, as behavioral production functions reveal: Firstly, output varies with judicial experience in a manner that suggests an impact of career concerns on effort and performance. Secondly, more change on the labor market gives rise to new legal problems and, therefore, leads to a larger number of published opinions. Since these are a proxy for judicial lawmaking, this finding suggests that judge-made law is an important ingredient of German labor law: It clarifies statutes and updates previous court opinions.