10th Class • Attendance Sheet • Audio Recorder on • Review • Legal Origin • Exam • 24 hour take home exam • Monday-Wednesday, April 16-18 2012 • Probably 3 documents and questions • Much like documents and questions assigned and discussed for each class
Review • English courts do not have power to invalidate legislation on constitutional grounds • But several mechanisms by which can overturn executive, administrative and even judicial action • Ordinary trespass suit against government official • Wilkes v. Wood • Habeas Corpus • Bushell’s case • Certiorari • Review of JPs and administrative courts
Legal Origin • Nearly all countries have legal systems based on (British) common law or (French) civil law • Some countries have legal systems based on German or Scandinavian law • Some countries have elements of both systems • Israel, Mauritius, Sri Lanka, South Africa • Differences • Judicial decisionmaking more important in Common Law countries • Codes more important in civil law countries • Juries sometimes used in Common Law countries • Career judiciaries in civil law countries • Recent law graduates become judges in less important courts, and then are promote over time • Like civil service position • “recognition” judiciaries in common law countries • Judges appointed late in life after careers in private or public sector • Common law judges have greater protections for judicial independence • In what way is Israel a common law country? In ways is it a civil law country? • Is common law better? Is civil law better?
LLSV • = LaPorta, Lopez-de-Silanes, Shleifer & Vishny • Economists at Harvard, World Bank…. • Over the last decade, LLSV have written very influential papers that show link from common law legal origin to good policies and outcomes • Investor protection → large capital markets • Free labor markets → low unemployment • Judicial independence → property rights • Theory • Common law more supportive of free markets • Common law more adaptable, less formalistic
Contributions My Paper • Analysis of colonial origin • Legal origin highly correlated with colonial origin • But not identical • Law was not only institution imposed by colonial power • Education, infrastructure, etc. • English, French and other colonial powers did not colonize randomly • Economic Growth, 1960-2007 as dependent variable • In general, care about investor protection and property rights because care about economic growth
Robustness Checks • LLSV coding of legal origin • Countries still colonies in 1960 • Countries for which legal origin exogenous • Just legal origin (without colonial origin) • Just colonial origin (without legal origin) • Horse race: colonial & legal origin together • Geographic variables • Not robust • Matched pairs • Plan more work • Log 2003 GDP per capita as dependent variable
Other Dependent Variables • Regressions with other dependent variables • Market cap/GDP; Credit/GDP; Corruption; Unemployment • Neither legal origin nor colonial origin consistently better • Puzzle: Why is common law associated with so many good things (e.g. capital markets, property rights…) but not economic growth? • 3 plausible solutions • Capital markets etc. don’t matter for growth • Acemoglu & Robinson, “Unbundling Institutions” (2005) • Common law has offsetting disadvantages • Spamann, “Legal Origins of Crime…” • Effect of things measured by LLSV are positive • But too small to be captured by regressions. Perhaps 0.5%
Conclusion • Hard to disentangle legal and colonial origin • But results suggest that colonial origin was more important, at least for economic growth • Common Law countries grew, on average, 0.5% faster • But common law advantage better explained by colonial policy and selection than by law • Non-French colonies with French law grew faster than French colonies • British colonies with mixed legal systems grew faster than those with common law • Colonial proxies (education, life expectancy) have more explanatory power than legal proxies (juries, case law, judicial independence)