New Economics Papers
on Law and Economics
Issue of 2012‒03‒28
seven papers chosen by
Jeong-Joon Lee, Towson University

  1. Constitutional Property Rights Protection and Economic Growth: Evidence from the Post-Communist Transition By Bjørnskov, Christian
  2. The law's majestic equality ? the distributive impact of litigating social and economic rights By Brinks, Daniel M.; Gauri, Varun
  3. Freedom of Contract in Islamic Contract Law: an Economic Analysis By Youcef Maouchi
  4. Simple Rules for a Complex World: Is it so? By Pierre Garello
  5. Buying the Right to Harm: The Economics of Buyouts By Ehud Guttel; Shmuel Leshem
  6. Do privacy laws affect the location decisions of internet firms? evidence for privacy havens By ROCHELANDET, Fabrice; TAI, Silvio H.T.
  7. Searching For Work with a Criminal Record By Smith, Sandra Susan; Broege, Nora C. R.

  1. By: Bjørnskov, Christian (Department of Economics and Business, Aarhus University)
    Abstract: Abstract: This paper seeks to estimate the economic growth effect of constitutional provisions for property rights protection. It does so using the unique situation in formerly communist countries in Central and Eastern Europe and the Caucasus where all but two introduced new constitutions after the fall of the Iron Curtain. The effects of implementing different constitutional provisions can therefore be observed in a group of countries with the same formal starting point. Estimates provide no evidence of positive effects and mainly point towards a negative conclusion: the introduction of constitutional protection of property rights is not associated with economic development in the long run, but tends to impose costs during a period of institutional transition and implementation proportional to the constitutional change.
    Keywords: property rights; constitutional political economy; transition
    JEL: K40 O43 P16 P37
    Date: 2012–03–20
  2. By: Brinks, Daniel M.; Gauri, Varun
    Abstract: Optimism about the use of laws, constitutions, and rights to achieve social change has never been higher among practitioners. But the academic literature is skeptical that courts can direct resources toward the poor. This paper develops a nuanced account in which not all courts are the same. Countries and policy areas characterized by judicial decisions with broader applicability tend to avoid the potential anti-poor bias of courts, whereas areas dominated by individual litigation and individualized effects are less likely to have pro-poor outcomes. Using data on social and economic rights cases in five countries, the authors estimate the potential distributive impact of litigation by examining whether the poor are over or under-represented among the beneficiaries of litigation, relative to their share of the population. They find that the impact of courts varies considerably across the cases, but is positive and pro-poor in two of the five countries (India and South Africa), distribution-neutral in two others (Indonesia and Brazil), and sharply anti-poor in Nigeria. Overall, the results of litigation are much more positive for the poor than conventional wisdom would suggest.
    Keywords: Health Monitoring&Evaluation,Judicial System Reform,Population Policies,Gender and Law,Labor Policies
    Date: 2012–03–01
  3. By: Youcef Maouchi (CERGAM-CAE, Aix-Marseille Université)
    Abstract: While economic analysis of law is used to develop a better understanding of the role and the impact of contract law, and more generally “western law,” there is no such analysis for Islamic law, one of the world?s largest legal systems. The doorstep in any discussion of contract law — given that private contracts are enforced — being the degree of freedom left to contracting parties, an analysis of contractual freedom under Islamic law is relevant and necessary. This article addresses this question from an economic point of view. First, an overview of Islamic contract law and its system of nominate contracts is provided. Second, we survey the debate among Islamic jurists about contractual freedom fostered by this system. Finally, an economic analysis is conducted.
    Keywords: Contacts, Law and Economics, Islamic contracts law, Freedom of contract
    Date: 2011
  4. By: Pierre Garello (CERGAM-CAE, Aix-Marseille Université)
    Abstract: Epstein gave to one of his books a title that summarizes the main conclusion of some studies, in particular Hayek's, of emergent orders (also known as spontaneous orders) such as the law and the market: we need, says Epstein, simple rules to cope with a complex world. We offer a critical appraisal of that statement looking in particular to his analysis of liability rule and argue that a rule of negligence, albeit more complex than strict liability, fits better the dynamics of a complex order. We conclude that the nature of the process through which the rule emerges is more important than its simplicity. We close the paper with some general reflections on the challenges presented by new researches in adaptive complex orders.
    JEL: K00 K13 P51 B41
    Date: 2011–04
  5. By: Ehud Guttel (Duke Law School); Shmuel Leshem (USC School of Law)
    Abstract: Many injurers now offer to buy out victims' property to reduce harm. This pa- per examines the e¢ ciency of buyouts negotiated in the shadow of regulation and liability rules which require injurers to take e¢ cient precautions. It shows that if the social bene?t from precautions is increasing with victims?expected harm, buyouts reduce social welfare. Because buyouts allow injurers to take fewer precautions, a buyout of one victim produces a negative externality for the remaining victims. The injurer can thus exploit victims through a "divide-and-conquer" strategy: making simultaneous, discriminatory take-it-or-leave-it buyout offers. The injurer's profit from buyouts is greater if o¤ers are sequential. Perhaps most surprisingly, buyouts reduce social welfare and victims' joint profits even if victims make simultaneous or sequential take-it-or-leave-it buyout demands to the injurer.
    Keywords: Cost-benefit standards, divide and conquer, harmful externalities
    JEL: K13 C72
    Date: 2011–05
  6. By: ROCHELANDET, Fabrice; TAI, Silvio H.T.
    Abstract: This paper empirically studies the location decisions of internet firms when they face high legal standards of privacy protection. Many factors might influence them: technological spillovers, lower taxation, and so on. Internet firms can also arbitrate national differences and many of them actually locate their activity in order to escape from national laws they consider over-stringent. In the current stage of development of the internet – the so-called Web 2.0 – the ease of access to personal data proved to be strategic input. So the more a jurisdiction makes collecting and using these data easy, the more attractive the country is, if all other things remain constant. One way for a firm to avoid such legal restrictions is to locate or to expand its business in less privacy protective countries. Our empirical results support this 'no-privacy haven' hypothesis. In particular, we highlight a new privacy paradox according to which the more stringent certain online privacy laws are, the more they induce firms to locate their business in less stringent countries, and finally the weaker actual privacy protection on the internet is.
    Keywords: Privacy; Firms’ Location; Internet
    JEL: K29 F23 L86
    Date: 2012
  7. By: Smith, Sandra Susan; Broege, Nora C. R.
    Abstract: To date, researchers have been very attentive to how the stigma of criminality informs employers’ hiring decisions, and, in the process, diminishes the employment opportunities afforded to jobseekers so stigmatized. Few researchers, however, have investigated the extent to which criminal records also shape jobseekers’ search strategies in ways that either attenuate or amplify the effects of their negative credentials. We fill this gap in the literature by investigating how arrest, conviction, and incarceration affect the scope of jobseekers’ search efforts as well as the specific methods they deploy. We then examine the extent to which gaps in job search success can be attributed to stigmatized jobseekers’ search strategies. Analysis of the NLSY97 reveals that arrestees and former prisoners (but not ex-convicts) are disadvantaged both by the scope of their search efforts and by the specific methods they use. Arrestees are less likely than non-offenders to find work during the search process because they use fewer search methods, and because they over-invest in ineffective methods while under-investing in more effective methods. Although former prisoners are also disadvantaged by over- and under-investing, we primarily attribute their lower odds of search success to the differential impacts of their search strategies. Even when the scope and nature of their searches mirror those of non-offenders, their searches are less likely to end successfully. By bringing “search†into debates on punishment and inequality, we provide a new and complementary way to understand how a criminal record negatively affects jobseekers’ chances of finding work.
    Keywords: Sociology, Sociology and Anthropology, Urban Studies/Affairs, Criminal record, job search methods, job search scope, job search success, employment, network search, labor market intermediaries, going-it-alone, race and gender
    Date: 2012–03–05

This issue is ©2012 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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