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The quality of the legal system and labor market performance around the world

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  • Horst Feldmann

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Abstract

Using data on 75 countries for six years in the period 1995 to 2003, this paper analyzes empirically whether and to what extent the quality of the legal system affects the performance of the labor market. According to the regression results, a legal system characterized by a dependent judiciary, biased courts, a lack of intellectual property protection and a lack of integrity increases unemployment and lowers the employment level. The magnitude of the effect seems to be substantial, particularly among young people.

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File URL: http://hdl.handle.net/10.1007/s10657-008-9092-4
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Bibliographic Info

Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 28 (2009)
Issue (Month): 1 (August)
Pages: 39-65

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Handle: RePEc:kap:ejlwec:v:28:y:2009:i:1:p:39-65

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Web page: http://www.springerlink.com/link.asp?id=100264

Related research

Keywords: Employment; Legal system; Rule of law; Unemployment; E24; J23; J64; K00; K40;

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References

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  1. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
  2. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Juan Botero & Simeon Djankov & Rafael Porta & Florencio C. Lopez-De-Silanes, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1339-1382, November.
  4. Alesina, Alberto & Devleeschauwer, Arnaud & Wacziarg, Romain & Kurlat, Sergio & Easterly, William, 2003. "Fractionalization," Scholarly Articles 4553003, Harvard University Department of Economics.
  5. Neumark, David & Wascher, William, 2007. "Minimum Wages and Employment," IZA Discussion Papers 2570, Institute for the Study of Labor (IZA).
  6. Pablo T. Spiller & Rafael Gely, 1992. "Congressional Control or Judicial Independence: The Determinants of U.S. Supreme Court Labor-Relations Decisions, 1949-1988," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 463-492, Winter.
  7. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
  8. Horst Feldmann, 2005. "Labour Market Institutions and Labour Market Performance in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 47-82.
  9. Horst Feldmann, 2009. "Geography and Labor Market Performance," Eastern Economic Journal, Palgrave Macmillan, vol. 35(2), pages 190-208.
  10. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
  11. Horst Feldmann, 2006. "The Quality of Industrial Relations and Labour Market Performance," LABOUR, CEIS, vol. 20(3), pages 559-579, 09.
  12. Torstensson, Johan, 1994. "Property Rights and Economic Growth: An Empirical Study," Kyklos, Wiley Blackwell, vol. 47(2), pages 231-47.
  13. Horst Feldmann, 2006. "Credit Market Regulation and Labor Market Performance Around the World," Kyklos, Wiley Blackwell, vol. 59(4), pages 497-525, November.
  14. Andrea Bassanini & Romain Duval, 2006. "The determinants of unemployment across OECD countries: Reassessing the role of policies and institutions," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 7-86.
  15. Lars P. Feld & Stefan Voigt, 2003. "Economic Growth and Judicial Independence: Cross Country Evidence Using a New Set of Indicators," CESifo Working Paper Series 906, CESifo Group Munich.
  16. Simeon Djankov & Rafael La Porta & Florencio LopezdeSilanes & Andrei Shleifer, 2000. "The Regulation of Entry," NBER Working Papers 7892, National Bureau of Economic Research, Inc.
  17. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
  18. Horst Feldmann, 2009. "The effects of hiring and firing regulation on unemployment and employment: evidence based on survey data," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2389-2401.
  19. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
  20. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Jul, pages 2-13.
  21. Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
  22. Landes, William M & Posner, Richard A, 1975. "The Independent Judiciary in an Interest-Group Perspective," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 875-901, December.
  23. Horst Feldmann, 2003. "Labor Market Regulation and Labor Market Performance: Evidence Based on Surveys among Senior Business Executives," Kyklos, Wiley Blackwell, vol. 56(4), pages 509-540, November.
  24. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 16-27, March.
  25. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
  26. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  27. Anderson, Gary M & Shughart, William F, II & Tollison, Robert D, 1989. "On the Incentives of Judges to Enforce Legislative Wealth Transfers," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 215-28, April.
  28. Horst Feldmann, 2006. "Government Size and Unemployment: Evidence from Industrial Countries," Public Choice, Springer, vol. 127(3), pages 443-459, June.
  29. Horst Feldmann, 2008. "Business regulation and labor market performance around the world," Journal of Regulatory Economics, Springer, vol. 33(2), pages 201-235, April.
  30. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
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Cited by:
  1. Araujo, Luis & Ponczek, Vladimir P., 2012. "Informal wages in an economy with active labor courts," Textos para discussão 294, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).

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