New Economics Papers
on Law and Economics
Issue of 2011‒10‒15
six papers chosen by
Jeong-Joon Lee, Towson University

  1. "Robin Hook": The Developmental Effects of Somali Piracy By Anja Shortland
  2. Long term unemployment and violent crimes - using post-2000 data to reinvestigate the relationship between unemployment and crime By Almén, Daniel; Nordin, Martin
  3. Crime and Unemployment: Evidence from Europe By Duha T. Altindag
  4. The Plaintiff's Role in Enforcing a Court Ruling: Evidence from a Labor Court in Mexico By David S. Kaplan; Joyce Sadka
  5. Law, finance, economic growth and welfare: why does legal origin matter? By Simplice A., Asongu
  6. The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool By Orley C. Ashenfelter; Daniel S. Hosken; Matthew C. Weinberg

  1. By: Anja Shortland
    Abstract: Naval counter-piracy measures off Somalia have failed to change the incentives for pirates, raising calls for land-based approaches that may involve replacing piracy as a source of income. This paper evaluates the effects of piracy on the Somali economy to establish which (domestic) groups benefit from ransom monies. Given the paucity of economic data on Somalia, we evaluate province-level market data, nightlight emissions and high resolution satellite imagery. We show that significant amounts of ransom monies are spent within Somalia. The impacts appear to be spread widely, benefiting the working poor and pastoralists and offsetting the food price shock of 2008 in the pirate provinces. Pirates appear to invest their money principally in the main cities of Garowe and Bosasso rather than in the backward coastal communities.
    Keywords: Somalia, piracy, cash transfers, economic development, remote sensing, satellite imaging
    JEL: K42 O17 O18 R11
    Date: 2011
  2. By: Almén, Daniel (Department of Economics, Lund University); Nordin, Martin (Department of Economics, Lund University)
    Abstract: Abstract This study reinvestigates the relationship between unemployment and crime. By being the first study to use long-term unemployment, it contributes unique findings. Moreover, with a Swedish panel consisting of 288 municipalities and annual data from 1997 to 2009, the relationship is investigated for the first time with aggregate post-2000 data. The results show that long-term unemployment exhibits a strong association with violent crimes in addition to property crimes, highlighting a potential gap in the conventional theories of economics of crime. The point-estimate of long-term unemployment for violent crimes is between 1.5 and 4, and for property crimes it is between 1.3 and 2.3. Thus, long-term unemployment identifies a marginal group for committing crimes, particularly violent crimes, better than total unemployment does. Long-term unemployment plausibly creates a feeling of alienation that fosters violent and other non-rational behaviors.
    Keywords: crime; unemployment; long-term unemployment
    JEL: J20 K14 K42
    Date: 2011–10–07
  3. By: Duha T. Altindag
    Abstract: I investigate the impact of unemployment on crime using a country-level panel data set from Europe that contains consistently-measured crime statistics. Unemployment has a positive influence on property crimes. Using earthquakes, industrial accidents and the exchange rate movements as instruments for the unemployment rate, I find that 2SLS point estimates are larger than OLS estimates.
    Keywords: Crime; Europe; Unemployment; Earthquakes; Industrial accidents; Instrumental variables
    JEL: K42 J00
    Date: 2011–10
  4. By: David S. Kaplan; Joyce Sadka
    Abstract: We analyze the outcomes of 332 cases from a labor court in Mexico in which a judge awarded money to a plaintiff who claimed to have been fired by a firm without cause. The judgments were enforced in only 40% of the cases. A plaintiff may try to enforce a judgment by petitioning the court to seize the firm's assets when the firm refuses to pay. Thirty eight percent of the enforced judgments required at least one seizure attempt. We estimate the parameters of post judgment games in which the worker does not know if a seizure attempt would ultimately succeed and show that these models explain the data well. We then simulate the effects of a policy that reduces worker costs of a seizure attempt. We find that this policy would increase the probability of enforcement, either by increasing the probability that the worker attempts an asset seizure or by inducing firms to pay voluntarily to avoid such seizure attempts. However, reducing worker costs of seizure attempts can only have a modest effect on enforcement probabilities because a high percentage of firms are able to avoid payment in spite of worker efforts to force collection.
    Keywords: Labor :: Labor Policy, Public Sector :: Judicial Administration & Legal Reform, Labor :: Workforce & Employment, Social Development :: Social Policy & Protection, Labor Courts, Severance Payments, Enforcement of Labor Law
    JEL: J65 K31 K41
    Date: 2011–07
  5. By: Simplice A., Asongu
    Abstract: This paper proposes and empirically validates four theories of why legal origin influences growth and welfare through finance. It is a natural extension of “Law and finance: why does legal origin matter?” by Thorsten Beck, Asli Demirgüç-Kunt and Ross Levine (2003). We find only partial support for the Mundell(1972), La Porta et al. (1998) and Beck et al.(2003) hypotheses that English common-law countries tend to have better developed financial intermediaries than French civil-law countries. While countries with English legal tradition have legal systems that improve financial depth, activity and size, countries with French legal origin overwhelmingly dominate in financial intermediary allocation efficiency. Countries with Portuguese legal origin fall in-between.
    Keywords: Law; Financial development; Growth; Welfare
    JEL: O1 K2 G2 P5 K4
    Date: 2011–08–18
  6. By: Orley C. Ashenfelter; Daniel S. Hosken; Matthew C. Weinberg
    Abstract: Many experts speculate that U.S. antitrust policy towards horizontal mergers has been too lenient. We estimate the price effects of Whirlpool’s acquisition of Maytag to provide new evidence on this debate. We compare price changes in appliance markets most affected by the merger to markets where concentration changed much less or not at all. We estimate price increases for dishwashers and relatively large price increases for clothes dryers, but no price effects for refrigerators or clothes washers. The combined firm’s market share fell across all four affected categories and the number of distinct appliance products fell.
    JEL: K2 K21 L11 L4
    Date: 2011–10

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