New Economics Papers
on Law and Economics
Issue of 2010‒02‒13
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Private Law Enforcement, Fine Sharing, and Tax Collection: Theory and Historical Evidence By Metin M. Cosgel; Haggay Etkes; Thomas J. Miceli
  2. Accounting for the Racial Property Crime Gap in the US: A Quantitative Equilibrium Analysis By Marco Cozzi
  3. An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work By Konstantinos, Pouliakas; Ioannis, Theodossiou
  4. The role of the IASB and auditing standards in the aftermath of the 2008/2009 Financial Crisis. By Ojo, Marianne

  1. By: Metin M. Cosgel (University of Connecticut); Haggay Etkes (Bank of Israel); Thomas J. Miceli (University of Connecticut)
    Abstract: This paper contributes to the literature on private law enforcement by proposing a novel solution to the problem of underenforcement by monopolistic enforcers. Monopolistic enforcers underinvest in fine collection because, by maximizing net expected revenue, they ignore the social benefits of deterrence. We show that this problem can be partially resolved by combining the tasks of law enforcement with tax collection because a joint enforcer-collector will have an interest in reducing the crime rate in order to maximize his income from taxes. In support of the theory, we discuss two historical examples of this practice: decentralized law enforcement under European feudalism, and centralized law enforcement in the Ottoman Empire.
    Keywords: Criminal fines, deterrence, private law enforcement, tax collection
    JEL: H11 K42 N40
    Date: 2010–01
  2. By: Marco Cozzi (Queen’s University)
    Abstract: This paper studies the effects of both labor market conditions and asset poverty on the property crimes involvement of American males. Since the mid 60’s the property crimes arrest rate has been four times higher for black males if compared to white ones. Another set of stylised facts show for the first demographic group lower educational levels and worse labor market outcomes, with the African Americans supplying less hours of labor, gaining lower wages, experiencing both higher unemployment duration and rates. At the same time, more than 30% of black households had a negative net worth. A dynamic general equilibrium model is developed, exploiting these facts to quantitatively assess the race crime gap, that is the difference in crime explained by the difference in observables. The model is calibrated relying on US data and solved numerically. The model captures well relevant dimensions of the crime phenomenon, such as the inmates composition by race, employment status and education. Simulation results show that the observed poverty and labor market outcomes account for as much as 90% of the arrest rates ratio. Finally the model is used to compare two alternative policy experiments aimed at reducing the aggregate crime rate: increasing the expenditure on police seems to be cost effective, when compared to an equally expensive lump-sum subsidy targeted to the high school dropouts.
    Keywords: Property crimes, Computable General Equilibrium, Incomplete Markets, Race, Wealth Inequality
    JEL: K42 D58 D52 D99 J15
    Date: 2010–01
  3. By: Konstantinos, Pouliakas; Ioannis, Theodossiou
    Abstract: This paper engages in an interdisciplinary survey of the current state of knowledge related to the theory, determinants and consequences of occupational safety and health (OSH). First, it synthesizes the available theoretical frameworks used by economists and psychologists to understand the issues related to the optimal provision of OSH in the labour market. Second, it reviews the academic literature investigating the correlates of a comprehensive set of OSH indicators, which portray the state of OSH infrastructure (social security expenditure, prevention, regulations), inputs (chemical and physical agents, ergonomics, working time, violence) and outcomes (injuries, illnesses, absenteeism, job satisfaction) within workplaces. Third, it explores the implications of the lack of OSH in terms of the economic and social costs that are entailed. Finally, the survey identifies areas of future research interests and suggests priorities for policy initiatives that can improve the health and safety of workers.
    Keywords: health; safety; indicators; accidents; diseases; absenteeism
    JEL: K32 J81 J17 J28
    Date: 2010–01–30
  4. By: Ojo, Marianne
    Abstract: The primary argument of this paper is, namely, that the International Accounting Standards Board (IASB), is in need of an enforcement mechanism. In drawing attention to this argument, the paper not only proposes considerations which are to be taken into account if such a mechanism is to be implemented, but also considers areas in which the regulation of accounting standards, and auditing standards in particular, have contributed to the recent global financial crisis. The impact of such standards on pro cyclicality, the level of success achieved by the IASB and other international standard setters such as the Basel Committee on Banking Supervision, relates to how effectively the accounting and audit standard setting is implemented. As well as identifying the importance of convergence in contributing towards high quality audits and the consistent application of auditing and accounting standards, this paper also acknowledges the difficulties and challenges encountered in attempting to achieve a convergent framework. Furthermore, through a discussion of recommendations aimed at consolidating transparency and accounting, as proposed by the G20, ways in which accounting standards, and consequently the IASB, could contribute further to the improvement of transparency and accountability of the framework for fair value measurements and evaluation, are considered. The absence of enforcement mechanisms, the fact that enforcement actions are carried out at national level in various EU member states, present sources of obstacles to attempts to realise the proposals put forward by the G20. This paper not only attempts to address such factors, but also to suggest ways in which the IASB, to an extent, could realise its goals. Through a consideration of two enforcement regimes in Europe, namely, Germany and the UK, two related standards which govern enforcement in Europe, principles on which harmonisation of the institutional oversight systems in Europe may be achieved , and the vital contribution made by CESR and EFRAG (the European Financial Reporting Advisory Group), this paper will consider how enforcement could be implemented by the IASB at European level.
    Keywords: Audit; FASB; IASB; regulation; Financial Crisis; standards
    JEL: K2 G2 G3 M4
    Date: 2010–01

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