Abstract
Longstanding debates in development economics and economic history have been concerned with the role of state capacity. A less studied channel emphasizes legal capacity - the ability of a state to enforce its laws. But exactly how is legal capacity developed? What are its longer-term effects within economies? We study how local legal capacity developed in England and Wales prior to and during the Industrial Revolution. The monarchy long relied on unpaid magistrates, known as Justices of the Peace (JPs), to enforce the law in counties. We show that non-honorary JPs increased in number and influence during the 1600s and 1700s. We also show that counties with more JPs around 1700 experienced more economic development - proxied by population density and property income- over the following 140 years. Higher JP numbers in 1700 are also associated with less employment in agriculture later. Our identification strategy relies on a rich set controls for geography and pre-17th century development. We also use the number of JPs in 1544 and number of resident gentry around 1670 as instruments, which strengthen the causal interpretation of our results. Our findings have implications for locating the Industrial Revolution and the significance of legal capacity for economic development.