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Access to justice and entrepreneurship: evidence from Brazil’s Special Civil Tribunals

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  • Guilherme Lichand

    (Harvard University)

  • Rodrigo R. Soares

    () (Department of Economics PUC-Rio)

Abstract

Entrepreneurship is usually indentified as an important determinant of aggregate productivity and long-term growth. The determinants of entrepreneurship, nevertheless, are not entirely understood. A recent literature has linked entrepreneurship to the development of the justice system. This paper contributes to this literature by evaluating the role of access to justice in determining the incidence of entrepreneurship. We explore the creation of Special Civil Tribunals in the Brazilian state of São Paulo during the 1990s. Special Civil Tribunals increased the geographic presence of the justice system, simplified judicial procedures, and increased the speed of adjudication of disputes. Using census data, and difference-in-differences and instrumental variable strategies, we find that implementation of Special Civil Tribunals led to increased entrepreneurship, defined as the probability that individuals are employers or selfemployed. Results are particularly strong and robust for the case of self-employment, and do not seem to be related to other changes in infrastructure or public good provision at the local level, or to pre-existing trends in entrepreneurship.

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Bibliographic Info

Paper provided by Department of Economics PUC-Rio (Brazil) in its series Textos para discussão with number 591.

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Length: 39p
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:rio:texdis:591

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Keywords: access to justice; courts; entrepreneurship; institutions; Brazil Jel Codes: K1; K41; K42; H41; O12; O17; O54;

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  1. Ghatak, Maitreesh & Nien-Huei Jiang, Neville, 2002. "A simple model of inequality, occupational choice, and development," Journal of Development Economics, Elsevier, vol. 69(1), pages 205-226, October.
  2. Chemin, Matthieu, 2009. "Do judiciaries matter for development? Evidence from India," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 230-250, June.
  3. Ana Carla A. Costa & João M. P. De Mello, 2008. "Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans," NBER Chapters, in: Financial Markets Volatility and Performance in Emerging Markets, pages 155-184 National Bureau of Economic Research, Inc.
  4. Chemin, Matthieu, 2009. "The impact of the judiciary on entrepreneurship: Evaluation of Pakistan's "Access to Justice Programme"," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 114-125, February.
  5. Naritomi, Joana & Soares, Rodrigo R. & Assunção, Juliano J., 2009. "Institutional Development and Colonial Heritage within Brazil," IZA Discussion Papers 4276, Institute for the Study of Labor (IZA).
  6. Christiano A. Coelho & João M.P. De Mello & Bruno Funchal, 2012. "The Brazilian Payroll Lending Experiment," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 925-934, November.
  7. Andrew Postlewaite, 2007. "Courts of Law and Unforeseen Contingencies," Journal of Law, Economics and Organization, Oxford University Press, vol. 23(3), pages 662-684, October.
  8. Antunes, António & Cavalcanti, Tiago & Villamil, Anne, 2008. "The effect of financial repression and enforcement on entrepreneurship and economic development," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 278-297, March.
  9. Erwan Quintin, 2008. "Contract enforcement and the size of the informal economy," Economic Theory, Springer, vol. 37(3), pages 395-416, December.
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