•  
  •  
 

The Differential Impact of Legal Origins on Firm Productivity

Start Page

611

Abstract

This paper examines the differential impact of legal origins on the distribution of firm-level total factor productivity (TFP) using a novel grouped-quantile treatment model with group-level unobservable characteristics. Using firm-level data across 51 countries from the World Bank Enterprise Survey, we find that firm-level TFP is higher on average in countries with common-law systems, especially in low-income countries. This impact is not uniform across the TFP distribution, with stronger impacts among high-productivity firms. Given the relatively low levels of international competitiveness among firms in low-income countries, this finding has important implications for their capability to break into export markets and create high-quality jobs. For the possible mechanisms of how legal origins affect firms’ TFP, we find that common-law countries have lower business obstacles as reflected in more favorable legal rules and regulations for access to finance, less corruption, less crime, less informality, and better tax administration.

Full text not available in ChicagoUnbound.

Share

COinS