Showing papers by "Rafael La Porta published in 2003"
TL;DR: The authors argue that to understand the basic tradeoff between the costs of disorder and those of dictatorship, one needs to understand how institutions exert profound influence on economic development and apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice.
798 citations
TL;DR: The authors examine the effect of securities laws on stock market development in 49 countries and find almost no evidence that public enforcement benefits stock markets, and strong evidence that laws facilitating private enforcement through disclosure and liability rules benefit stock markets.
Abstract: We examine the effect of securities laws on stock market development in 49 countries. We find almost no evidence that public enforcement benefits stock markets, and strong evidence that laws facilitating private enforcement through disclosure and liability rules benefit stock markets.
758 citations
TL;DR: The authors investigated the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries and found that richer countries regulate labor less than poorer countries do, although they have more generous social security systems.
Abstract: We investigate the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries. We find that richer countries regulate labor less than poorer countries do, although they have more generous social security systems. The political power of the left is associated with more stringent labor regulations and more generous social security systems. Socialist and French legal origin countries have sharply higher levels of labor regulation than do common law countries, and the inclusion of legal origin wipes out the effect of the political power of the left. Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young. These results are difficult to reconcile with efficiency and political power theories of institutional choice, but are broadly consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.
474 citations
Posted Content•
TL;DR: The authors argue that to understand the basic tradeoff between the costs of disorder and those of dictatorship, one needs to understand how institutions exert profound influence on economic development, and apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice.
Abstract: In recent years, comparative economics experienced a revival, with a new focus on comparing capitalist economies. The theme of the new research is that institutions exert a profound influence on economic development. We argue that, to understand capitalist institutions, one needs to understand the basic tradeoff between the costs of disorder and those of dictatorship. We then apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice.
420 citations
Posted Content•
TL;DR: The authors argue that, to understand capitalist institutions, one needs to understand the basic tradeoff between the costs of disorder and those of dictatorship, and apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice.
Abstract: In recent years, comparative economics experienced a revival, with a new focus on comparing capitalist economies. The theme of the new research is that institutions exert a profound influence on economic development. The authors argue that, to understand capitalist institutions, one needs to understand the basic tradeoff between the costs of disorder and those of dictatorship. They then apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice. This paper - a product of the Private Sector Advisory Department, Private Sector Development Vice Presidency - is part of a larger effort to understand institutional differences in the regulation of business.
137 citations
TL;DR: This paper found strong support for the proposition that both judicial independence and constitutional review are associated with greater freedom, consistent with theory, and argued that judicial independence accounts for some of the positive effect of common law legal origin on measures of economic freedom.
Abstract: In the Anglo-American constitutional tradition, judicial checks and balances are often seen as crucial guarantees of freedom. Hayek (1960) distinguishes two ways in which the judiciary provides such checks and balances: judicial independence and constitutional review. We create a new data base of constitutional rules in 71 countries that reflect these provisions. We find strong support for the proposition that both judicial independence and constitutional review are associated with greater freedom. Consistent with theory, judicial independence accounts for some of the positive effect of common law legal origin on measures of economic freedom. The results point to significant benefits of the Anglo-American system of government for freedom.
71 citations