New Economics Papers
on Law and Economics
Issue of 2012‒05‒22
four papers chosen by
Jeong-Joon Lee, Towson University

  1. The economic costs of organized crime: evidence from southern Italy By Paolo Pinotti
  2. The Hog-Cycle of Law Professors By Christoph Engel; Hanjo Hamann
  3. Goals Met or Just Empty Promises? First Version of the Democratic Security Policy in Colombia By Gerson Javier Pérez V.
  4. The Macroeconomic Effects of Legal- Simplification Programmes By Luis Costa; Miguel St. Aubyn

  1. By: Paolo Pinotti (Università Bocconi, Department of policy analysis and public management)
    Abstract: I examine the post-war economic development of two regions in southern Italy exposed to mafia activity after the 1970s and apply synthetic control methods to estimate their counterfactual economic performance in the absence of organized crime. The synthetic control is a weighted average of other regions less affected by mafia activity that mimics the economic structure and outcomes of the regions of interest several years before the advent of organized crime. The comparison of actual and counterfactual development shows that the presence of mafia lowers the growth path, at the same time as murders increase sharply relative to the synthetic control. Evidence from electricity consumption and growth accounting suggest that lower GDP reflects a net loss of economic activity, due to the substitution of private capital with less productive public investment, rather than a mere reallocation from the official to the unofficial sector.
    Keywords: organized crime, economic development, synthetic control methods
    JEL: K4 R11 O17
    Date: 2012–04
  2. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Hanjo Hamann (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: The market for law professors fulfils the conditions for a hog cycle: in the short run, supply cannot be extended or limited; future law professors must be hired soon after they first present themselves, or leave the market; demand is inelastic. Using a comprehensive German dataset, we show that the number of market entries today is significantly negatively correlated with the number of market entries 8 years ago. This is quite precisely the time young scholars on average take to prepare for the market. To get this estimate, we detrend the data, and we control for the size of student cohorts when these candidates enter university. This control variable mediates the effect of birth cohorts when candidates are born, which themselves exhibit negative autocorrelation, with a lag of some 20 years. Using our statistical model, we make out of sample predictions for the German academic market in law until 2020.
    Keywords: market for law professors, hog-cycle, time series, out of sample prediction
    JEL: K23 K00 D84 D92 J22 D22 C22 J45
    Date: 2012–04
  3. By: Gerson Javier Pérez V.
    Abstract: Exploiting spatial and temporal variations in the number of seizures from criminal organizations, I estimate regional fixed effects models of the increase in the number of properties confiscated on the main crime rates. From 2002 security strategies changed, and as a result, the effects on crime rates are mostly large, negative and significant. There was a clear reduction in crimes commonly committed by organized criminals, including guerrillas, paramilitaries and drug-traffickers, such as auto-theft, terrorism, terrestrial piracy, and kidnappings. In contrast, crimes usually committed by common criminals, such as street robberies and burglaries were unaffected by the new security policy.
    Keywords: Crime; security policies; regional analysis Classification JEL: K1, H5, R5.
    Date: 2012–03
  4. By: Luis Costa; Miguel St. Aubyn
    Abstract: Legal simplification may improve the quality of institutions in industrialised countries that developed over-complex legal systems. In theory, this type of regulatory reform promotes economic efficiency, leading to higher levels of productivity and output. In this paper we use a Panel Factor-Augmented VAR approach to measure the long-run impact of legal-simplification programmes in total factor productivity. We identify shocks using data on regulatory quality and exploring qualitative information publicly available. The estimated long-run impact on total factor productivity of a typical programme is significant and about 0.6 per cent.
    Keywords: Legal simplification; Regulatory reform; FAVAR; Productivity JEL Classification: E02, K10, K20, K40, O43, O47
    Date: 2012–05

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.