Faculty of Science, Technology and Medicine
Faculty of Law, Economics and Finance
Faculty of Humanities, Education and Social Sciences
Interdisciplinary Centre for Security, Reliability and Trust
Luxembourg Centre for Systems Biomedicine
Luxembourg Centre for Contemporary and Digital History
Luxembourg Centre for European Law
Luxembourg Centre for Socio-Environmental Systems
Legislation, Regulation and Litigation:
Demand for U.S. Legal Services in Historical Perspective
Abstract
The employment share of legal services in the U.S. more than doubled during 1970–1990, in stark contrast to stability during 1850–1970 and after 1990. During the same period, the relative wage of lawyers and law firm partners increased by 60%. We argue that this demand shift was driven by important legislative and regulatory events, starting in the mid-1960s and lasting throughout the 1980s. These changes increased the scope of the law and uncertainty over legal outcomes. Consistent with this, we find that employment and compensation of lawyers are tightly correlated with federal regulation, fee shifting statues, and civil litigation, over a period of 100 years. These findings are supported by state-level and individual-level analysis. Other factors, e.g., changes in lawyers’ quality, industrial composition and technology, are not important determinants of the demand shift. A back-of-the-envelope calculation suggests that 13% of the increase in demand for legal services in 1970–1990 is due to an increase in uncertainty in new legislation. This represents a cost of 28 billion dollars in 2024 alone, capturing misallocation of talent.
About the speaker
Ariell Reshef is a CNRS researcher (Directeur de Recherche), an Associate Member of the Paris School of Economics, and program director at the Institute for Macroeconomic and International Policies (i-MIP) at PSE. Until January 2016 he was an Associate Professor (with tenure) at the University of Virginia. He obtained his Ph.D. in economics from New York University in 2008. His research interests revolve around the relationship of labor markets with global trade, GVCs, technological change, and regulation. His work lies at the intersection of International Trade, Labor Economics, and Macroeconomics. His current research projects examine structural change of employment and evolution of productivity in France, AI, global value chains, and the long run evolution of the legal services sector in the United States.
Language
English
Supported by the Fond National de la Recherche
Luxembourg (19441346)