New Economics Papers
on Law and Economics
Issue of 2008‒12‒07
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Corruption and Positive Selection in Privatization By Raluca E. Buia; M. Cristina Molinari
  2. How Corruption Affects Bank Lending in Russia By Laurent Weill
  3. Labour standards and ILO’s effectiveness in the governance of globalization By Fabrizio Onida
  4. Convergence of violent crime in the United States: Time series test of nonlinear By Baharom, A.H.; Habibullah, M.S.; Royfaizal, R. C

  1. By: Raluca E. Buia (Advanced School of Economics, University Of Venice Cà Foscari); M. Cristina Molinari (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We consider the supply of a public good based on a publicly-owned facility. The Government has a choice between provision in-house and privatizing the facility and then outsourcing the production. In particular, we focus on corruption in the decision to privatize and on its effect on social welfare when there is asymmetric information on the public and private manager's efficiency. Our analysis shows that a corrupt Government, that chooses to privatize only in exchange for a bribe, makes a positive selection on the private firm's efficiency and, thus, may raise expected social welfare above what an honest Government could get.
    Keywords: Corruption, Privatization, Private vs. public provision.
    JEL: D73 H44 K42 L33
    Date: 2008
  2. By: Laurent Weill (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg)
    Abstract: The aim of this study is to investigate the impact of corruption on bank lending in Russia. This issue is of major interest in order to understand the causes of financial underdevelopment and the effects of corruption in Russia. We use regional measures of corruption and bank-level data to perform this investigation. Our main estimations show that corruption hampers bank lending in Russia. We investigate whether this negative role of corruption is influenced by the degree of bank risk aversion, but find no effect. The detrimental effect of corruption is only observed for loans to households and firms, in opposition to loans to government. Additional controls confirm the detrimental impact of corruption on bank lending. Therefore, our results provide motivations to fight corruption to favor bank lending in Russia.
    Keywords: Corruption, Bank, Russia, Financial Development, Economic Transition.
    JEL: G20 K4 P2
    Date: 2008
  3. By: Fabrizio Onida (CESPRI, Bocconi University- Italy)
    Abstract: The paper starts with a brief recollection of International Labor Office (ILO)’s historical milestones – ILO being the only tripartite international organization with representatives of labour, industry and governments - covering the main Conventions on labour standards (including the four “core labour standards”). Then the paper focuses on ILO’s main duties as a supervisor of labour markets conditions and as an agent and direct player with local governments: designing appropriate policies for a “decent work” agenda in the world, pushing for the widest possible adoption of the Conventions themselves by member countries, monitoring compliance of those standards, promoting bilateral and multilateral actions with governments aimed at correcting major violations of these standards. Special emphasis is given to possible improvements in the effectiveness of ILO’s procedures and initiatives, under the assumption that actions based on positive incentives are far more plausible and effective than negative sanctions, especially in view of greater coherence between ILO and WTO mission in promoting a better governance of globalization. Examples of such actions are moral suasion on policy makers aimed at affecting labour legislation, design of unilateral trade concessions and/or regional trade liberalization agreements conditional on actual commitment to improve labour and social conditions in the target country (such as GSP+), joint initiatives with multinational companies and local government in developing countries so as to diffuse school attendance and eradicate worst forms of child labour , training of public administrators-legal experts-union leaders trough the ILO’s special training office in Turin (Italy). Summary references are made to the ongoing debate about globalization, inequalities, “race to the bottom”, quality of institutions. The final section summarizes major conclusions and recommendations that have been approved by CNEL’s general assembly on June 5, 2008, also in view of the annual meeting of AICESIS (International Association of Economic and Social Councils) held in Rome on June 12, 2008.
    Keywords: Labour standards, ILO, WTO, globalization
    JEL: F16 I28 J5 J78 K33 O19
    Date: 2008–07
  4. By: Baharom, A.H.; Habibullah, M.S.; Royfaizal, R. C
    Abstract: This study examines the violent crime convergence among the fifty one states in the United States. The chosen method for this analysis is nonlinear unit root test due to Kapetanios et al. (KSS, 2003), which was later extended by Chong et al. (CHLL, 2008). KSS-CHLL nonlinear unit root was applied for the test of nonlinear convergence among the fifty one states with respect to the national average for the period 1960 to 2007. Result of the study indicates that eight cases of long run converging, two cases of catching up, while the remainder forty one are diverging from the national average.
    Keywords: convergence of crime; united states; non-linear
    JEL: N92 K42
    Date: 2008–10–29

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