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Law and social capital: Evidence from the Code Napoleon in Germany

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  • Buggle, Johannes C.

Abstract

I test whether legal institutions crowd-in social cooperation in the long-run, using the introduction of the Code Napoleon in parts of 19th century Germany as a historical experiment. I find that the application of the Code Napoleon is associated with higher levels of trust and cooperation today. This finding is robust to an identification strategy that uses only individuals located around a discontinuity in the number of years the Code Civil was used. Results from a falsification test that moves this discontinuity artificially, as well as the comparison of pre-treatment characteristics support the interpretation of a causal effect. In addition, regions around the discontinuity are similar in post-treatment economic development and inequality. On the contrary, the positive social consequences of the Code Civil manifest themselves in less political fraud in elections from 1871 to 1900, and in more “bridging” social capital in the 1920s.

Suggested Citation

  • Buggle, Johannes C., 2016. "Law and social capital: Evidence from the Code Napoleon in Germany," European Economic Review, Elsevier, vol. 87(C), pages 148-175.
  • Handle: RePEc:eee:eecrev:v:87:y:2016:i:c:p:148-175
    DOI: 10.1016/j.euroecorev.2016.05.003
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    6. Huning, Thilo R. & Wahl, Fabian, 2021. "The fetters of inheritance? Equal partition and regional economic development," European Economic Review, Elsevier, vol. 136(C).
    7. Chaudhary, Latika & Rubin, Jared & Iyer, Sriya & Shrivastava, Anand, 2020. "Culture and colonial legacy: Evidence from public goods games," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 107-129.
    8. Emilio Depetris-Chauvin & Ruben Durante & Filipe Campante, 2020. "Building Nations through Shared Experiences: Evidence from African Football," American Economic Review, American Economic Association, vol. 110(5), pages 1572-1602, May.
    9. Bonick, Matthew & Farfán-Vallespín, Antonio, 2018. "The reversal of fortune, extractive institutions and the historical roots of racism," The Constitutional Economics Network Working Papers 06-2018, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    10. Johannes C Buggle & Ruben Durante, 2021. "Climate Risk, Cooperation and the Co-Evolution of Culture and Institutions," The Economic Journal, Royal Economic Society, vol. 131(637), pages 1947-1987.
    11. Ivanov, Denis, 2023. "Institutional reforms and social trust: Quasi-experimental evidence from the Caucasian states," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 829-859.
    12. Michael Fritsch & Michael Wyrwich, 2023. "Entrepreneurship in the Long-Run: Empirical Evidence and Historical Mechanisms," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 19(1), pages 1-125, January.
    13. Quamrul H. Ashraf & Francesco Cinnirella & Oded Galor & Boris Gershman & Erik Hornung, 2017. "Capital-Skill Complementarity and the Emergence of Labor Emancipation," CESifo Working Paper Series 6423, CESifo.
    14. Enste, Dominik & Acht, Martin, 2018. "Democratic support and corruption: Lessons from East Europe," IW-Reports 44/2018, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    15. Quamrul H. Ashraf & Francesco Cinnirella & Oded Galor & Boris Gershman & Erik Hornung, 2017. "Capital-Skill Complementarity and the Emergence of Labor Emancipation," CESifo Working Paper Series 6423, CESifo.
    16. Michael Fritsch & Michael Wyrwich, 2017. "Persistence of Regional Entrepreneurship: Causes, Effects, and Directions for Future Research," Jena Economics Research Papers 2017-003, Friedrich-Schiller-University Jena.
    17. D'Acunto, Francesco & Xie, Jin & Yao, Jiaquan, 2022. "Trust and contracts: Empirical evidence," LawFin Working Paper Series 32, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    18. Albers, Hakon & Pfister, Ulrich, 2023. "State formation and market integration: Germany, 1780–1830," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 403-421.
    19. Karaja, Elira & Rubin, Jared, 2022. "Θ The cultural transmission of trust norms: Evidence from a lab in the field on a natural experiment," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 1-19.
    20. Lecce, Giampaolo & Ogliari, Laura, 2019. "Institutional Transplant and Cultural Proximity: Evidence from Nineteenth-Century Prussia," The Journal of Economic History, Cambridge University Press, vol. 79(4), pages 1060-1093, December.
    21. Francesco D'Acunto & Jin Xie & Jiaquan Yao, 2020. "Trust and Contracts: Empirical Evidence," CESifo Working Paper Series 8714, CESifo.
    22. Fabian Wahl, 2017. "Does European development have Roman roots? Evidence from the German Limes," Journal of Economic Growth, Springer, vol. 22(3), pages 313-349, September.

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    More about this item

    Keywords

    Institutions; Long-term persistence; Trust; Social capital;
    All these keywords.

    JEL classification:

    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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