The Legal Origins of Economic Development in Mexico

This paper examines the persistent eects of colonial legal capacity. Exploiting a spatial regression discontinuity design in Mexico, I document that regions historically exposed to more capable colonial courts exhibit higher historical and contemporary economic prosperity. In contrast to the view that empow- ering royally-biased judges weakened property rights, court records analyzed with NLP algorithms suggest these constrained settlers from expropriating in- digenous lands. In the long-run, a feedback loop appears to have consolidated an emerging rural middle class, whose relative enfranchisement tied them less to patronage politics, encouraging public good provision and labor mobility.