DRI Working Paper No. 50
By Claudia Williamson, NYU and Carrie Kerekes, Florida Gulf Coast University

Securing Private Property: Formal versus Informal Institutions
Property rights is one of the most fundamental and highly robust institutions supporting economic performance. However, the channels through which property rights are achieved are not adequately identified. This paper is a first step towards unbundling the black box of property rights into a formal and informal component. We empirically determine the significance of both informal and formal rules in securing property rights. We find that when both components are included in the analysis, the impact of formal constraints are greatly diminished, while informal constraints are highly significant in explaining the security of property. These results are robust to a variety of model specifications, multiple instrumental variable and a range of control variables.