New Economics Papers
on Law and Economics
Issue of 2012‒05‒15
five papers chosen by
Jeong-Joon Lee, Towson University

  1. For Every Law, a Loophole: Flexibility in the Menu of Spanish Business Forms, 1886-1936 By Timothy W. Guinnane; Susana Martinez Rodriguez
  2. Experiments in culture and corruption : a review By Banuri, Sheheryar; Eckel, Catherine
  3. Firm Size and Judicial Efficiency in Italy: Evidence from the Neighbour's Tribunal By Silvia Giacomelli; Carlo Menon
  4. Indian Labour Law and its Impact on Unemployment, 1970-2006: A leximetric study By Deakin, S.; Sarkar, P.
  5. Enforcement and air pollution: an environmental justice case study By Germani, Anna Rita; Morone, Piergiuseppe; Testa, Giuseppina

  1. By: Timothy W. Guinnane (Economics Department, Yale University); Susana Martinez Rodriguez (Department of Applied Economics, University of Murcia)
    Abstract: The Spanish business code allowed firms great flexibility in their organizational form in the late nineteenth and early twentieth century. Until 1920, firms had the same basic choices as in France and some other European countries, namely, the corporation, the ordinary partnership, or the limited partnership. But Spanish law was unusually flexible, allowing firms to adapt the corporation especially to the needs of its owners. Starting in 1920 Spanish firms could also organize as a Sociedad de Responsabilidad Limitada (SRL), a form similar to the German GmbH or the British Private Limited Company (PLC). But some firms had already adopted the form prior to 1920. The Spanish coded lacked the principle of “numerus clauses” that is central to many areas of law. Most business codes allow firms to choose only from a proscribed menu of options. The Spanish code offered these options but also stated that firms could organize in other ways if they wished. This paper uses three empirical sources to study the way firms actually used those possibilities. We find that this flexibility did not make entrepreneurs indifferent across the different organizational forms.
    Keywords: Spanish economic history, legal form of enterprise, law and finance
    JEL: K20 N43 N44
    Date: 2012–05
  2. By: Banuri, Sheheryar; Eckel, Catherine
    Abstract: Two decades of empirical evaluation have shown that corruption has a negative impact on economic growth, political stability, judicial effectiveness, democratization, educational attainment, and equality of income. However, corruption exists, persists, and varies significantly by culture. Lab studies have recently come to the forefront in identifying both the incentives and disincentives for corrupt behavior. However, lab studies on culture and corruption have led to some puzzling, contradictory results. This paper begins with a discussion of non-experimental work in this area, and evaluates the experimental findings in the context of earlier research. The authors sketch out the channels through which culture interacts with corruption (through institutions and social norms), and argue that discrepancies in experimental results may be due to differences in design (including repetition or unobserved variation in beliefs) or to differences in the response to punishment across societies. In addition to exploring design-based reasons for previous contradictory findings, avenues for future research include: behavioral responses to different types of externalities; replicating results in different countries; and utilizing the lab to formulate effective anti-corruption measures.
    Keywords: Public Sector Corruption&Anticorruption Measures,Corruption&Anticorruption Law,Cultural Policy,Crime and Society,Social Accountability
    Date: 2012–05–01
  3. By: Silvia Giacomelli; Carlo Menon
    Abstract: We investigate the causal relationship between judicial efficiency and firm size across Italian municipalities, exploiting spatial discontinuities in tribunals' jurisdiction for identification. Results show that halving the length of civil proceedings, average firm size would increase by around 8-12%, everything else equal. Results are robust to a number of different specifications, based on two different databases.
    Keywords: Justice efficiency, Firm size, Spatial discontinuity approach, Italy
    JEL: K4 L11 O18
    Date: 2012–05
  4. By: Deakin, S.; Sarkar, P.
    Abstract: We analyse a recently developed leximetric dataset on Indian labour law over the period 1970 to 2006. Indian labour law is seen to be highly protective of workers' interests by international standards, particularly in the area of dismissal regulation. We undertake a time-series econometric analysis to estimate the impact of the strengthening of labour laws on unemployment and industrial output in the formal economy. We find no evidence that pro-worker labour legislation leads to unemployment or industrial stagnation. Rather, pro-worker labour laws are associated with low unemployment, with the direction of causality running from unemployment and output to labour regulation.
    Keywords: slabour law, unemployment, India
    JEL: K31 J08 J50 J60 J83
    Date: 2011–12
  5. By: Germani, Anna Rita; Morone, Piergiuseppe; Testa, Giuseppina
    Abstract: This paper provides an environmental justice empirical analysis on the relationship between income, demographic characteristics and concentrations of air industrial pollutants within the Italian provinces. Two general conclusions can be drawn from the empirical results. First, the estimates obtained are consistent with an inverse U-shaped environmental Kuznets curve: air pollution releases increase with income up to a turning point, where the relation reverts. Second, there is evidence that air releases tend to be higher in provinces with high concentration of females as households’ head and with high concentration of children. Since our findings do not point to environmental discrimination on the basis of ethnicity, this suggests that environmental justice issues in Italy are not likely to manifest themselves along racial and ethnic terms but instead in terms of social categories and gender composition. We also find that judicial inefficiency (a measure of the inefficiency of law enforcement) is associated with higher levels of pollution. In terms of policy implications, this result suggests the need to strengthen, all through the territory, the local enforcement of environmental laws in order to possibly reduce the negative effects on ambient air pollution.
    Keywords: Environmental justice; social inequalities; air pollution emissions
    JEL: K32 Q50
    Date: 2011–10

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