Court output, judicial staffing, and the demand for court services: Evidence from Slovenian courts of first instance

We contribute to the scant empirical literature on court activity by examining how judicial staffing and caseload influence court output in Slovenia, a post-socialist EU member state struggling with implementing an effective judicial system. Unlike the majority of the existing literature, we attempt to tackle endogeneity problems that arise in estimation of the determinants of court output. In addition to controlling for court fixed effects to address endogeneity due to unobserved court-level heterogeneity, an instrumental variables approach based on a plausible assumption of sequential exogeneity of our regressors allows us to address the problem of reverse causality between court output and both caseload and judicial staffing. Our findings suggest that ignoring endogeneity issues may lead to erroneous policy conclusions about the expected impact of resources, as proxied by judicial appointments, devoted to the court system. Our results imply that the primary driving force of output of Slovenian courts is the demand for their services.