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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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    Cited by:

    1. Marcel Prokopczuk & Francesco D'Acunto & Michael Weber, 2015. "Distrust in Finance Lingers: Jewish Persecution and Households' Investments," 2015 Meeting Papers 26, Society for Economic Dynamics.
    2. 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 Group Munich.
    3. Jared Rubin & Elira Karaja, 2017. "The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment," Working Papers 17-08, Chapman University, Economic Science Institute.
    4. Giampaolo Lecce & Laura Ogliari, 2015. "Institutional Transplant and Cultural Proximity: Evidence from Nineteenth-Century Prussia," CESifo Working Paper Series 5652, CESifo Group Munich.
    5. repec:kap:jecgro:v:22:y:2017:i:3:d:10.1007_s10887-017-9144-0 is not listed on IDEAS
    6. Murat Iyigun & Jared Rubin, 2017. "The Ideological Roots of Institutional Change," Working Papers 17-06, Chapman University, Economic Science Institute.
    7. Michael Fritsch & Michael Wyrwich, 2017. "Persistence of Regional Entrepreneurship: Causes, Effects, and Directions for Future Research," Jena Economic Research Papers 2017-003, Friedrich-Schiller-University Jena.

    More about this item

    Keywords

    Institutions; Long-term persistence; Trust; Social capital;

    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 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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