Abstract:-

Well-functioning frontline courts facilitate dispute resolution, making them a core aspect of state capacity. Using rich data from India and an event study research design around the timing of judge staffing changes, I show that these have a persistent effect on judge headcount and vacancy rates in the corresponding district court. Removal of vacancy substantially improves local judicial capacity, where each additional judge improves the rate of backlog resolution by 10 percent. In a context with high levels of congestion in local courts, this capacity improvement enables credit circulation, and increases the productivity of local formal sector firms, generating a benefit-cost ratio exceeding 3. Creation of vacancy has a negative effect on the local firms. The effects of reduced judicial capacity is likely manifested through the ability of law enforcement agencies to contain less serious crimes that require court orders prior to investigation.