IDEAS home Printed from https://ideas.repec.org/p/eid/wpaper/15966.html
   My bibliography  Save this paper

The Quality of the Legal System and Labor Market Performance around the World

Author

Listed:
  • Horst Feldmann

    (University of Bath)

Abstract

Using data on 75 countries for six years in the period 1995 to 2003, this paper analyzes empirically whether and to what extent the quality of the legal system affects the performance of the labor market. According to the regression results, a legal system characterized by a dependent judiciary, biased courts, a lack of intellectual property protection and a lack of integrity increases unemployment and lowers the employment level. The magnitude of the effect seems to be substantial, particularly among young people.

Suggested Citation

  • Horst Feldmann, 2009. "The Quality of the Legal System and Labor Market Performance around the World," Department of Economics Working Papers 12/09, University of Bath, Department of Economics.
    • Handle: RePEc:eid:wpaper:15966
    as

    Download full text from publisher

    File URL: https://purehost.bath.ac.uk/ws/files/355213/1209.pdf
    File Function: Final published version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    2. Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio & Wacziarg, Romain, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-194, June.
    3. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
    4. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 28(Jul), pages 2-13.
    5. Pablo T. Spiller & Rafael Gely, 1992. "Congressional Control or Judicial Independence: The Determinants of U.S. Supreme Court Labor-Relations Decisions, 1949-1988," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 463-492, Winter.
    6. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    7. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    8. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    9. Horst Feldmann, 2009. "Geography and Labor Market Performance," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(2), pages 190-208.
    10. Horst Feldmann, 2005. "Labour Market Institutions and Labour Market Performance in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 47-82.
    11. Andrea Bassanini & Romain Duval, 2007. "The determinants of unemployment across OECD countries: Reassessing the role of policies and institutions," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 7-86.
    12. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    13. E. Paul Durrenberger, 2005. "Labour," Chapters, in: James G. Carrier (ed.), A Handbook of Economic Anthropology, chapter 8, Edward Elgar Publishing.
    14. Horst Feldmann, 2006. "Credit Market Regulation and Labor Market Performance Around the World," Kyklos, Wiley Blackwell, vol. 59(4), pages 497-525, November.
    15. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Social, Employment and Migration Working Papers 35, OECD Publishing.
    16. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    17. Gallup, John L. & Sachs, Jeffrey D. & Mellinger, Andrew, "undated". "Geography and Economic Development," Instructional Stata datasets for econometrics geodata, Boston College Department of Economics.
    18. Horst Feldmann, 2008. "Business regulation and labor market performance around the world," Journal of Regulatory Economics, Springer, vol. 33(2), pages 201-235, April.
    19. Hayek, F. A., 1991. "The Fatal Conceit," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226320663 edited by Bartley, III, W. W., April.
    20. Horst Feldmann, 2009. "The effects of hiring and firing regulation on unemployment and employment: evidence based on survey data," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2389-2401.
    21. repec:bla:kyklos:v:47:y:1994:i:2:p:231-47 is not listed on IDEAS
    22. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
    23. Landes, William M & Posner, Richard A, 1975. "The Independent Judiciary in an Interest-Group Perspective," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 875-901, December.
    24. Horst Feldmann, 2006. "The Quality of Industrial Relations and Labour Market Performance," LABOUR, CEIS, vol. 20(3), pages 559-579, September.
    25. Neumark, David & Wascher, William L., 2007. "Minimum Wages and Employment," Foundations and Trends(R) in Microeconomics, now publishers, vol. 3(1–2), pages 1-182, March.
    26. Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
    27. Badi H. Baltagi, 2021. "Econometric Analysis of Panel Data," Springer Texts in Business and Economics, Springer, edition 6, number 978-3-030-53953-5, December.
    28. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(1), pages 16-27, March.
    29. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 01A, Center for International Development at Harvard University.
    30. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    31. Assar Lindbeck & Dennis J. Snower, 1989. "The Insider-Outsider Theory of Employment and Unemployment," MIT Press Books, The MIT Press, edition 1, volume 1, number 026262074x, April.
    32. Swamy, P A V B & Arora, S S, 1972. "The Exact Finite Sample Properties of the Estimators of Coefficients in the Error Components Regression Models," Econometrica, Econometric Society, vol. 40(2), pages 261-275, March.
    33. Gallup, John & Sachs, Jeffrey, 1999. "Geography and Economic Development," Harvard Institute for International Development (HIID) Papers 294434, Harvard University, Kennedy School of Government.
    34. Feld, Lars P. & Voigt, Stefan, 2003. "Economic growth and judicial independence: cross-country evidence using a new set of indicators," European Journal of Political Economy, Elsevier, vol. 19(3), pages 497-527, September.
    35. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
    36. Johan Torstensson, 1994. "Property Rights and Economic Growth: An Empirical Study," Kyklos, Wiley Blackwell, vol. 47(2), pages 231-247, May.
    37. Anderson, Gary M & Shughart, William F, II & Tollison, Robert D, 1989. "On the Incentives of Judges to Enforce Legislative Wealth Transfers," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 215-228, April.
    38. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    39. Horst Feldmann, 2006. "Government Size and Unemployment: Evidence from Industrial Countries," Public Choice, Springer, vol. 127(3), pages 443-459, June.
    40. Horst Feldmann, 2003. "Labor Market Regulation and Labor Market Performance: Evidence Based on Surveys among Senior Business Executives," Kyklos, Wiley Blackwell, vol. 56(4), pages 509-540, November.
    41. Hayek, F. A., 2011. "The Constitution of Liberty," University of Chicago Press Economics Books, University of Chicago Press, number 9780226315379 edited by Hamowy, Ronald, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Callais, Justin T. & Mkrtchian, Gor, 2024. "Court-packing and judicial manipulation," European Journal of Political Economy, Elsevier, vol. 83(C).
    2. Araujo, Luis Fernando Oliveira de & Ponczek, Vladimir Pinheiro, 2012. "Informal wages in an economy with active labor courts," Textos para discussão 294, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    3. Luis Araujo & Vladimir Ponczek & André Portela Souza, 2016. "Informality in an economy with active labour courts," Applied Economics, Taylor & Francis Journals, vol. 48(30), pages 2868-2882, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eid:wpaper:12/09 is not listed on IDEAS
    2. Horst Feldmann, 2008. "Business regulation and labor market performance around the world," Journal of Regulatory Economics, Springer, vol. 33(2), pages 201-235, April.
    3. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
    4. Feldmann, Horst, 2012. "Banking deregulation around the world, 1970s to 2000s: The impact on unemployment," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 26-42.
    5. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    6. Horst Feldmann, 2007. "Economic Freedom and Unemployment around the World," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 158-176, July.
    7. Feldmann, Horst, 2009. "Business regulation, labor force participation and employment in industrial countries," Journal of Economics and Business, Elsevier, vol. 61(3), pages 238-260.
    8. Malik, Adeel & Temple, Jonathan R.W., 2009. "The geography of output volatility," Journal of Development Economics, Elsevier, vol. 90(2), pages 163-178, November.

    More about this item

    Keywords

    unemployment; employment; rule of law; legal system;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eid:wpaper:15966. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scholarly Communications Librarian (email available below). General contact details of provider: https://edirc.repec.org/data/debatuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.