The effect of judicial independence on entrepreneurship in the US states |
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| Institution: | 1. College of Business and Economics, West Virginia University, Morgantown, WV 26506-6025, United States;2. Manuel H. Johnson Center for Political Economy, Bibb Graves Hall, Troy University, Troy, AL 36082, United States;1. Department of Economics, Bogazici University, Natuk Birkan Building, 34342 Bebek, Istanbul, Turkey;2. Department of Economics, Macalester College, 1600 Grand Avenue, Saint Paul, MN 55105, United States;1. Department of Applied Economics, National Research University Higher School of Economics, Moscow, Russia;2. Department of Economics and Management, University of Brescia, Italy;3. Department of Economics, University of Perugia, Italy;1. Department of Cardiology, University Medical Centre Ljubljana, Ljubljana, Slovenia;2. University of Ljubljana, Faculty of Medicine, Ljubljana, Slovenia;1. London Metropolitan University, Old Castle Street, E1 7NT London, United Kingdom;2. University College London, United Kingdom;3. IZA, United Kingdom;4. Rodolfo De Benedetti Foundation, Italy;5. University of Perugia, Italy;1. Facultad de Medicina, Pontificia Universidad Javeriana, Cali, Colombia;2. Departamento Medicina Interna, Facultad de Salud, Grupo Interinstitucional de Medicina Interna (GIMI 1), Universidad Libre, Cali, Colombia;3. Departamento de Medicina Familiar, Facultad de Salud, Universidad del Valle, Cali, Colombia |
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| Abstract: | The relationship between institutional quality, entrepreneurship, and economic growth has been well documented within the literature. However, much less work has been done regarding judicial independence and how this affects, specifically, entrepreneurial activity. Therefore, this paper attempts to fill that gap by exploiting the differences in judicial independence that exist between the US states and empirically evaluating how this affects entrepreneurship. Overall, the results suggest that the method of selecting and retaining justices of both courts of last resort and intermediate appellate courts has a significant and direct effect on entrepreneurial activity, though the latter result is somewhat less robust. The presence of judicial nominating and retention commissions also has a significant and direct effect. Further, although somewhat weaker, the method of selecting the chief justice of a state court of last resort would also appear to have an impact on entrepreneurship. These results are robust to a number of specifications. |
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| Keywords: | Entrepreneurship Judicial independence Legal institutions Legal quality Economic growth |
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