New Economics Papers
on Law and Economics
Issue of 2006‒05‒06
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Women and Illegal Activities: Gender Differences and Women’s Willingness to Comply over Time By Benno Torgler; Neven T. Valev
  2. Bankruptcy Law, Bonded Labor and Inequality By Dilip Mookherjee; Ulf von Lilienfeld-Toal

  1. By: Benno Torgler; Neven T. Valev
    Abstract: In recent years the topics of illegal activities such as corruption or tax evasion have attracted a great deal of attention. However, there is still a lack of substantial empirical evidence about the determinants of compliance. The aim of this paper is to investigate empirically whether women are more willing to be compliant than men and whether we observe (among women and in general) differences in attitudes among similar age groups in different time periods (cohort effect) or changing attitudes of the same cohorts over time (age effect) using data from eight Western European countries from the World Values Survey and the European Values Survey that span the period from 1981 to 1999. The results reveal higher willingness to comply among women and an age rather than a cohort effect.
    Keywords: corruption; bribe; social norms; tax compliance; gender effect; age effect; cohort effect
    JEL: H10 J16 K42
    Date: 2006–04
  2. By: Dilip Mookherjee (Institute for Economic Development, Boston University); Ulf von Lilienfeld-Toal (Department of Economics, University of Frankfurt)
    Abstract: Should the law restrict liability of defaulting borrowers? We abstract from possible benefits arising from limited rationality or risk-aversion of borrowers, contractual incompleteness, or lender moral hazard. We focus instead on general equilibrium implications of liability rules with moral hazard among borrowers with varying wealth. If lenders are on the short side of the market, weakening liability rules lower lender profits, may cause additional exclusion among the poor, but generate additional rents for wealthier borrowers. For certain changes in liability rules (such as a ban on bonded labor, or weakening bankruptcy rules below a wealth threshold) they also raise productivity among borrowers of intermediate wealth. Hence they can be interpreted as a form of efficiency-enhancing redistribution from lenders and poor borrowers to middle class borrowers. Our model provides a possible rationale for why weaker liability rules are observed in wealthier countries.

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