Lawyers and Economic Growth

Certain aspects of the legal profession get a lot of stick, some would say rightly so. While reading Robert Frank's Luxury Fever recently I came across this paper which suggests that this prejudice has an empirical basis, more lawyers reduce growth.

The Allocation of Talent: Implications for Growth

Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny

Abstract

A country's most talented people typically organize production by others, so they can spread their ability advantage over a larger scale. When they start firms, they innovate and foster growth, but when they become rent seekers, they only redistribute wealth and reduce growth. Occupational choice depends on returns to ability and to scale in each sector, on market size, and on compensation contracts. In most countries, rent seeking rewards talent more than entrepreneurship does, leading to stagnation. Our evidence shows that countries with a higher proportion of engineering college majors grow faster; whereas countries with a higher proportion of law concentrators grow more slowly.

Quarterly Journal of Economics, 1991, Volume106, Issue2, Pp. 503-530

Assorted Links

1. The Economist on British schools

2. Are "Dublin graduates" more likely to find jobs?

3. Poor students 'just as likely to gain good degree'

4. Volunteering: something that people feel morally obligated to do when asked, but which they would just as soon let someone else do?

5. Curb Your Enthusiasm: The Economist on the dangers of getting too excited

6. Speaking of curbing enthusiasm, below is a clip from the TV show where Larry David teaches Christian Slater the unwritten rules of hors d'oeuvres consumption. Peter Martin explains how this video illustrates the work of Elinor Ostrom for which she won this year's Economics Nobel Prize (on rules for managing common-pool resources).