The Economic Impact of Legislative Complexity and Corruption: a Cross-country Analysis

Abstract: This paper investigates econometrically the relationship between corruption and legislative complexity, and their impact on growth rate, welfare and distribution of the per capita income. We perform econometric analysis using new indicators and index of legislative complexity, built in a way that makes them internationally comparable. In the data set sixty-seven countries are considered, for a period of twenty-one years from 1995 to 2015. To estimate the effects of legislative complexity and political corruption on the growth rate of per capita income, OLS and 2SLS regressions are provided. The results of the econometric analysis support the hypothesis that legislative complexity is a constraint to growth, and that in countries with a long history of liberal democracy legislative complexity determines an income redistribution to the detriment of the poorer social classes.