Abstract: This paper (a chapter in a forthcoming book) develops in historical and analytical detail the economic case for labor and employment law using ideas/principles from institutional economics and industrial relations, particularly as contained in pre-WWII writings of Commons and other researchers in the First Law & Economics Movement. An innovation is a set of five diagrams that analytically represent the institutional/IR model of labor markets and associated rationale for labor law. Comparison and critique are also offered with the economic theory of competitive labor markets that forms the foundation for the Chicago-led Second Law & Economics Movement. Attention is paid to Posner's critique of labor law in his widely cited Economic Analysis of Law and the argument is made that it and Chicago-style law and economics more generally are logically defective and a poor basis for evaluating labor law.
