Showing papers by "Rafael La Porta published in 2004"
TL;DR: This article found that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose and also found that some of the instrumental variable techniques used in the literature are flawed.
Abstract: We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement. We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose. We also find that some of the instrumental variable techniques used in the literature are flawed. Basic OLS results, as well as a variety of additional evidence, suggest that (a) human capital is a more basic source of growth than are the institutions, (b) poor countries get out of poverty through good policies, often pursued by dictators, and (c) subsequently improve their political institutions.
2,543 citations
TL;DR: Botero et al. as discussed by the authors investigated the regulation of labor markets through employment, collective relations, and social security laws in 85 countries and found that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries.
Abstract: Author(s): Botero, Juan; Djankov, Simeon; La Porta, Rafael; Lopez-de-Silanes, Florencio; Shleifer, Andrei | Abstract: We investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries. We find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries. However, the effects of legal origins are larger, and explain more of the variation in regulations, than those of politics. Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young. These results are most naturally consistent with legal theories, according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems.
1,615 citations
Posted Content•
TL;DR: The authors found that most indicators of institutional quality used to establish the proposition that institutions cause economic growth are conceptually unsuitable for that purpose and also found that some of the instrumental variable techniques used in the literature are flawed.
Abstract: We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose We also find that some of the instrumental variable techniques used in the literature are flawed Basic OLS results, as well as a variety of additional evidence, suggest that a) human capital is a more basic source of growth than are the institutions, b) poor countries get out of poverty through good policies, often pursued by dictators, and c) subsequently improve their political institutions
1,592 citations
Posted Content•
TL;DR: In the Anglo-American constitutional tradition, judicial checks and balances are often seen as crucial guarantees of freedom as discussed by the authors, and Hayek distinguishes two ways in which the judiciary provides such checks: judicial independence and constitutional review.
Abstract: In the Anglo†American constitutional tradition, judicial checks and balances are often seen as crucial guarantees of freedom Hayek distinguishes two ways in which the judiciary provides such checks and balances: judicial independence and constitutional review We create a new database 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
572 citations
TL;DR: The authors showed that most indicators of institutional quality used to establish the proposition that institutions cause economic growth are conceptually unsuitable for that purpose and also found that some of the instrumental variable techniques used in the literature are flawed.
Abstract: We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement. We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose. We also find that some of the instrumental variable techniques used in the literature are flawed. Basic OLS results, as well as a variety of additional evidence, suggest that a) human capital is a more basic source of growth than are the institutions, b) poor countries get out of poverty through good policies, often pursued by dictators, and c) subsequently improve their political institutions.
564 citations
TL;DR: This paper found strong support for the proposition that both judicial independence and constitutional review are associated with greater freedom and 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 distinguishes two ways in which the judiciary provides such checks and balances: judicial independence and constitutional review. We create a new database 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.
531 citations
Posted Content•
TL;DR: The authors investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries and find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries.
Abstract: We investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries. We find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French, and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries. However, the effects of legal origins are larger, and explain more of the variation in regulations, than those of politics. Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young. These results are most naturally consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.
49 citations
Posted Content•
TL;DR: In this article, the authors describe the differences in laws and the effectiveness of their enforcement and explain how well investors, both shareholders and creditors, are protected by law from expropriation by the managers and controlling shareholders of firms.
Abstract: Recent research has documented large differences among countries in own ership concentration in publicly traded firms, in the breadth and depth of capital markets, in dividend policies, and in the access of firms to external fi nance. A common element to the explanations of these differences is how well investors, both shareholders and creditors, are protected by law from expropriation by the managers and controlling shareholders of firms. We describe the differences in laws and the effectiveness of their enforcement