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US State Tort Liability Reform and Entrepreneurship

Author

Listed:
  • Dove John A.

    (Manuel H. Johnson Center for Political Economy, Troy University, 137I Bibb Graves Hall, Troy, AL36082-0001, USA)

  • Dove Laura R.

    (Department of Marketing and Law, Human Resources, & Law, Troy University, 137P Bibb Graves Hall, Troy, AL36082, USA)

Abstract

Tort and civil liability reform has been a hotly debated issue across US states. This has spawned a large theoretical and empirical academic literature that evaluates the implications of such reform and the impact that it can have on various aspects of an economy. This study adds to that literature by considering how various tort reforms affect entrepreneurial activity across states. The study employs the Database of State Tort Law Reforms (6th Edition) and utilizes the Kauffman Index – an index of entrepreneurial startup activity – between 1996 and 2016, finding that liability reform is generally positively associated with increased entrepreneurial activity. These results are largely driven by joint and several liability, caps on noneconomic damages, limits on contingency fees, and collateral source rules though this latter result is somewhat less robust, while the effects of joint and several liability do not persist through time.

Suggested Citation

  • Dove John A. & Dove Laura R., 2020. "US State Tort Liability Reform and Entrepreneurship," Review of Law & Economics, De Gruyter, vol. 16(3), pages 1-45, November.
    • Handle: RePEc:bpj:rlecon:v:16:y:2020:i:3:p:45:n:4
    DOI: 10.1515/rle-2018-0067
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    References listed on IDEAS

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    More about this item

    Keywords

    entrepreneurship; tort reform; liability; Kauffman; economic growth;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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