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The effects of regulation on jobs have been a heated theme in contemporary political debate. In
economic research, the empirical work suggests that regulation plays little role in affecting the
aggregate number of jobs in the United States. However, the existing research has mostly focused
on the volume or stringency of regulation. Little attention has been paid to regulatory uncertainty,
and yet its impact on employment has a basis in the economic theory.

The economic literature generally suggests that increased uncertainty can lead to significant
declines in hiring, investment, consumption, and output in the economy. This Regulatory Insight
discusses how regulatory uncertainty may affect employment and presents some empirical
evidence that increased regulatory uncertainty leads to a temporary drop in aggregate employment.
Moreover, the employment effects of regulatory uncertainty are unequal, affecting workers with
low levels of education disproportionately.

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At the center of contemporary debates over public law lies administrative agencies’ discretion to impose rules. Yet, for every one of these rules, there are also unrules nearby.

Often overlooked and sometimes barely visible, unrules are the decisions that regulators make to lift or limit the scope of a regulatory obligation, for instance through waivers, exemptions, and exceptions.

In some cases, unrules enable regulators to reduce burdens on regulated entities or to conserve valuable government resources in ways that make law more efficient. However, too much discretion to create unrules can facilitate undue business influence over the law, weaken regulatory schemes, and even undermine the rule of law.

In this paper, we conduct the first systematic empirical investigation of the hidden world of unrules. Using a computational linguistic approach to identify unrules across the Federal Register, the Code of Federal Regulations, and the United States Code, we show that unrules are an integral and substantial feature of the federal regulatory system.

Our analysis shows that, by several conservative measures, there exists one obligation-alleviating word for approximately every five to six obligation-imposing words in federal law. We also show that unrules are surprisingly unrestrained by administrative law. In stark contrast to administrative law’s treatment of obligation-imposing rules, regulators wield substantially more discretion in deploying unrules to alleviate regulatory obligations. As a result, a major form of agency power remains hidden from view and relatively unencumbered by law. Recognizing the central role that unrules play in our regulatory system reveals the need to reorient administrative law and incorporate unrules more explicitly into its assumptions, doctrines, and procedures.