Religion, Politics, and Judicial Independence: Theory and Evidence

Sultan Mehmood (Aix Marseille School of Economics)
Avner Seror (Aix Marseille School of Economics)

Abstract : Most enlightenment philosophers argued that the separation between Church and State would prevent capture of resources by one state religion. We formalize and test a theory that addresses a different danger. We demonstrate that a reduction in the separation between Church and State can be corrosive to political institutions, especially the Judiciary. We show that religious leaders use their high legitimacy to gain political office, and become particularly abusive politicians, misusing their political authority to undermine the independence of the Judiciary. We provide a theoretical framework and estimate the structural equations of our theory using data from Pakistan. Our empirical strategy exploits the plausibly exogenous timing of a military coup to provide causal evidence for the key predictions of our theory.

Judicial Independence and Development: Evidence from Pakistan

Sultan Mehmood (Aix Marseille University, New Economic School)

Abstract : This paper provides causal evidence that Presidential appointment of judges considerably impacts judicial independence, decision quality, and economic development in Pakistan. We find that when the judge selection procedure changed from Presidential appointment to appointment by judge peers, rulings in favor of the government decreased significantly. We show that this reduction reflects an improvement in the quality of judicial decisions and development outcomes. The age structure of judges at the time of the reform and the mandatory retirement age law provide us with an exogenous source of variation in the implementation of the reform. We test for and find evidence against potential threats to identification and alternative explanations for our findings. The analysis of mechanisms reveals that our results are explained by rulings in politically salient cases and by “patronage” judges who hold political office prior to their appointments.

Judges, Lenders, and the Bottom Line: Court-ing Firm Growth in India

Manaswini Rao (University of California San Diego)

Abstract : Courts are considered important in the functioning of markets, and yet, there is limited causal evidence showing this. This paper estimates the causal effects of courts’ effectiveness on formal sector firm outcomes, illustrating ex-post contract enforcement in local credit markets as an important channel. To show this, I construct a novel panel dataset on court-level variables from 6 million trial-level data across 195 district courts in India and exploit quasi-random variation in judge vacancy for causal identification. There are three key implications of this paper. First, reducing marginal judge vacancy reduces court backlog by 6%. Second, this stimulates bank lending in local credit markets through improved liquidity from debt recoveries. Third, this affects credit availability, production, and profitability of firms located within the court’s jurisdiction. The results imply an 8:1 benefit to cost ratio of reducing marginal judge vacancy.

Selecting Top Bureaucrats: Admission Exams and Performance in Brazil

Thiago Scot (UC Berkeley Haas School of Business)
Ricardo Dahis (Northwestern University)
Laura Schiavon (Universidade Federal de Juiz de Fora)

Abstract : In the absence of strong incentive schemes, public service delivery crucially depends on bureaucrat selection. Despite being widely adopted by governments to screen candidates, it is unclear whether civil service examinations can predict job performance. This paper investigates this question by focusing on a highly prestigious and influential set of bureaucrats in Brazil: state judges. We first explore data on judges’ monthly output and cross-court movement to separately identify what share of observed performance is explained by judges and courts. We estimate that judges account for at least 23% of the observed variation in the number of cases disposed. Using a novel data set on examinations, we then show that, within cohorts of candidates taking the same exam, those with higher grades perform better than their lower-ranked peers. Our results suggest that competitive examinations can be an effective way to screen candidates, even among highly qualifiedcontenders.