Legal Origin, Income Inequality and Social Health

Posted: 9 Jun 2014

See all articles by John Ferguson

John Ferguson

Schoolo of Management, University of St Andrews

David Collison

University of Dundee - Department of Accountancy & Business Finance

David Power

affiliation not provided to SSRN

Lorna Stevenson

University of Dundee - School of Business

Date Written: June 9, 2014

Abstract

This study considers the association between legal origin, income inequality and one specific measure of social health - child mortality. In an influential body of work, La Porta et al. (1997, 1998) developed the proposition that stock market size and consequent economic development were promoted by a legal system which protected the interests of shareholders. Their investigation of legal regimes showed that common law countries generally offer stronger legal protection for shareholders than their civil law counterparts. Their immensely influential research has informed the basis of international policy prescriptions which aim to enhance the legal protection to shareholders; most notably, their research underpins international development initiatives by the World Bank. However, we contend that such policy initiatives, with their exclusive focus on economic criteria, are somewhat myopic. By considering the link between legal origin, income inequality and child mortality, this paper finds that common law countries (i.e. those with the greater legal protection for investors) exhibit greater levels of income inequality and have worse social outcomes in terms of under 5 child mortality.

Keywords: Legal traditions, Social indicators, Corporate governance, Investor protection

JEL Classification: I10

Suggested Citation

Ferguson, John and Collison, David J. and Power, David and Stevenson, Lorna, Legal Origin, Income Inequality and Social Health (June 9, 2014). Available at SSRN: https://ssrn.com/abstract=2447639

John Ferguson (Contact Author)

Schoolo of Management, University of St Andrews ( email )

The Gateway
North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

David J. Collison

University of Dundee - Department of Accountancy & Business Finance ( email )

Dundee, Scotland DD1 4HN
United Kingdom
+44(0)1382 344857 (Phone)

David Power

affiliation not provided to SSRN

Lorna Stevenson

University of Dundee - School of Business ( email )

University of Dundee
1 Perth road
Dundee, Scotland DD1 4HN
United Kingdom

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