Legal Origin from Outer Space (and on Foot): A Geographic Regression Discontinuity Approach

Abstract

This article advances the debate over legal origins by using survey data and satel- lite imagery to measure economic development and by employing a geographic re- gression discontinuity (GRD) design to take into account climate, culture, and other observable and unobservable factors correlated with location. The basic legal struc- ture of most countries was imposed by colonial powers, but Great Britain, France and other European nations did not colonize randomly. The lack of random assign- ment means that simple cross-country analyses may lead to erroneous conclusions because of unobservables correlated with legal origin. GRD is especially promising for Africa because many borders were drawn in Europe by diplomats and bureaucrats who had only the haziest knowledge of local conditions, except in coastal areas. As a result, borders split ethnic groups, and areas on either side of the border are similar along observable dimensions and presumably on unobservable ones as well. Satellite imagery is used to measure nighttime lights. Survey data are used to measure individual height and whether a household has electricity, a cell phone, a non-dirt floor, non-human-powered transport, or access to improved latrines or toilets. The regression coefficients are of mixed signs. The point estimates thus suggest that countries with common law legal origin do not perform consistently better, as measured by these eight proxies for economic development, than those with civil law. Most coefficients are not statistically significant at conventional levels, although the most robust of those that are – non-human-powered transport and light per capita – show a civil law advantage. Nevertheless, because the confidence intervals are wide, we cannot exclude a positive common law effect for most outcomes.