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Legal Rules and Bankruptcy Rates: Historical Evidence from the States

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Author Info
Mary Eschelbach Hansen () (Department of Economics, American University)
Bradley A. Hansen (Department of Economics, University of Mary Washington)
Abstract

Since the early twentieth century, observers have attributed the wide variation in state bankruptcy rates to variation in state legal rules such as garnishment and bankruptcy exemptions. Recent econometric analyses, however, conclude that legal rules do not matter. We explore the impact of legal rules on bankruptcy rates using a new technique—fixed effects vector decomposition—to exploit historical variation in legal rules. The technique allows us to estimate the impact of timeinvariant legal rules in a fixed effects framework. We find that the variation in state legal rules explains much of the variation in state wage earner bankruptcy rates for 1926 to 1932.

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File URL: http://www.american.edu/cas/econ/workingpapers/2006-16.pdf
File Format: application/pdf
File Function: First version, 2006
Download Restriction: no

Publisher Info
Paper provided by American University, Department of Economics in its series Working Papers with number 2006-16.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 49 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:amu:wpaper:1606

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Web page: http://www.american.edu/cas/economics/

For technical questions regarding this item, or to correct its listing, contact: (Thomas Meal).

Related research
Keywords: Bankruptcy; fixed effects vector decomposition; law and economics;

Find related papers by JEL classification:
N4 - Economic History - - Government, War, Law, and Regulation
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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This page was last updated on 2009-11-23.

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