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

Mandatory Minimum Sentencing, Drug Purity and Overdose Rates

This is the title of an article in the current edition of the Economic and Social Review by Ronald Davies (UCD). Link here. Abstract below.

Abstract: As of 1987, the US’s Anti-Drug Abuse Act (ADAA) has imposed mandatory minimum sentences for drug traffickers based on the quantity of the drug involved irrespective of purity. Using the STRIDE dataset and a differences-in-differences approach, I find that this led to increases in cocaine and heroin purity of 52 per cent and 27 per cent respectively. It also affected the distribution of purity around its mean. Using data on emergency room visits, I show that changes in the distribution of purity had significant impacts on such visits. These results provide insights useful when considering Ireland’s drug policies which include the use of mandatory minimum sentences.