Constitutional Protection of Economic Rights, Entrepreneurship and Labor Productivity
This lecture is part of Prof. Schäfer's lecture series "New Frontiers in Law and Economics".
Constitutions delineate the pillars of the legal systems that govern organizations and entities. They can be assumed to represent the institutional framework that governs and addresses the main features of social and economic life in a country. We analyze the impact of the protection of property rights (both physical and intellectual) and of economic freedom on a country’s endowment of entrepreneurship capital and on the productivity of labor. We find a strong correlation between constitutional protection and both the rate of creation of new businesses and the productivity of labor. The direction of causality goes from constitutional protection to enhanced entrepreneurial capital and labor productivity. Moreover, the interaction between constitutional norms and lower legislation is negative, suggesting that the two are substitutes.
Lecturer: Prof. Emanuela Carbonara, Professor of Law and Economics, University of BolognaBack