New Economics Papers
on Law and Economics
Issue of 2013‒10‒02
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Asset Forfeiture Laws and Criminal Deterrence By Derek Johnson; Thomas J. Miceli
  2. The distortive effects of antitrust fines based on revenue By Vasiliki Bageri; Yannis Katsoulacos; Giancarlo Spagnolo
  3. The civil standard of proof – what is it, actually? By Mark Schweizer
  4. An economics angle on the law By Stuart Birks
  5. Analysis of Judicial Practice in Cases of Unjustified Tax Benefits By A. Zolotareva
  6. Personal indebtedness, community characteristics and theft crimes By McIntyre Stuart G
  7. Divorce Laws and Divorce Rate in the U.S. By Stefania Marcassa
  8. Tearing the Veil of Privacy Law: An Experiment on Chilling Effects and the Right to Be Forgotten By Yoan Hermstrüwer; Stephan Dickert
  9. The Perverse Effects of Job-security Provisions on Job Security in Italy: Results from a Regression Discontinuity Design By Alexander Hijzen; Leopoldo Mondauto; Stefano Scarpetta
  10. Role of regulation in micro finance: jurisdictional analysis By Ojo, Marianne
  11. Women's legal rights over 50 years : what is the impact of reform ? By Hallward-Driemeier, Mary; Hasan, Tazeen; Rusu, Anca Bogdana
  12. Fighting African Conflicts and Crimes: Which Governance Tools Matter? By Asongu Simplice; Oasis Kodila-Tedika

  1. By: Derek Johnson (University of Connecticut); Thomas J. Miceli (University of Connecticut)
    Abstract: Asset forfeiture laws allow the seizure of assets used in the commission of a crime. This paper examines the impact of such laws on deterrence by incorporating the possibility of asset forfeiture into the standard economic model of crime. When punishment is by a fine that can be optimally chosen, forfeiture is never optimal because of the deadweight loss it imposes in the capital market. When the fine is limited by the offender’s wealth, forfeiture may or may not be desirable. Extensions of the basic model include the optimal use of forfeiture when (i) partial seizure is possible, (ii) punishment is by imprisonment, (iii) the probability of apprehension is endogenous, and (iv) enforcers are rent-seekers.
    Keywords: Criminal punishment, asset forfeiture, law enforcement
    JEL: H11 K14 K41
    Date: 2013–09
  2. By: Vasiliki Bageri (Athens University of Economics and Business); Yannis Katsoulacos (Athens University of Economics and Business); Giancarlo Spagnolo (SITE-Stockholm School of Economics, Tor Vergata University and CEPR)
    Abstract: In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterize their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.
    Keywords: Antitrust; Deterrence; Fines; Law Enforcement
    JEL: K21 L40
    Date: 2013–02
  3. By: Mark Schweizer (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Common Law distinguishes two standards of proof applicable in civil and criminal matters, respectively. The criminal standard of “beyond reasonable doubt” is much higher than the “preponderance of the evidence” standard used in civil cases. Continental European Civil Law, on the other hand, recognizes just one standard of “full conviction” applicable in both criminal and civil cases. This study is the first to look at the standard of proof actually used by judges and judicial clerks in a Civil Law country (Switzerland). It is shown that, when asked directly, the members of court express a high decision threshold in line with legal doctrine and case law. But when Swiss judges are asked to estimate the error costs associated with each outcome and the error-cost-minimizing decision threshold is calculated based on the responses, the resulting standard is no different from the Common Law’s “preponderance of the evidence” standard. When using the stated degree of belief in the truth of the plaintiff’s allegations as a predictor for the grant of the plaintiff’s request in a civil action, the probability of grant is 50% at a stated conviction of only 63%. It is further shown that the decision threshold is influenced by the individual’s loss aversion, with individuals with a higher loss aversion having a higher decision threshold. No difference between the estimated decision threshold for members of the courts and members of the general population is found. The results suggest that the standard of proof actually employed by Swiss judges is not much different from the Common Law’s “preponderance of the evidence” standard, despite the doctrinal insistence to the contrary.
    Date: 2013–07
  4. By: Stuart Birks (University of the West of England, Bristol and Massey University New Zealand)
    Abstract: Law and economics tends to focus on ways in which others respond to the law, or on economic input into legal deliberation. There is another dimension that can benefit from an economics perspective. Many people work in law-related occupations. They are delivering a service. In addition, policy is often formulated in terms of legislation or regulation, so the operation and impact of the law is an important aspect of much policy implementation. This paper considers the nature of law as an economic product, identifying characteristics and considering implications. There are parallels with approaches to economics in other areas, land and health being but two. The law has its own defining features, however. These include the nature of legal transactions, with more than one party making the consumption decision, and the importance of rhetoric, or persuasion, for determining outcomes. The nature of costs and benefits, available information, accountability of participants and conflicting objectives are some additional aspects meriting consideration. Several of these are discussed, using economic concepts as tools of analysis where they appear to suit particular circumstances. As such, the discussion illustrates the way that economics may contribute to understanding without requiring assumptions of complete description within a closed analytical system.
  5. By: A. Zolotareva (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: In this paper we propose a classification of disputes on matters related to obtaining an unjustified tax benefit, revealed the typical reason for change legal classification of transactions, evaluating the degree of uniformity of judicial practice for this category. According to the results of the analysis are formulated proposals to increase the degree of certainty of the tax law by specifying the content used it evaluative categories, as well as limiting the use of coercion in when the reason for bringing the taxpayer liable are rules are unclear.
    Keywords: tax
    JEL: H2
    Date: 2013–06
  6. By: McIntyre Stuart G (Department of Econimics, University of Strathclyde)
    Abstract: Becker (1968) and Stigler (1970) provide the germinal works for an economic analysis of crime, and their approach has been utilised to consider the response of crime rates to a range of economic, criminal and socioeconomic factors. Until recently however this did not extend to a consideration of the role of personal indebtedness in explaining the observed pattern of crime. This paper uses the Becker (1968) and Stigler (1970) framework, and extends to a fuller consideration of the relationship between economic hardship and theft crimes in an urban setting. The increase in personal debt in the past decade has been significant, which combined with the recent global recession, has led to a spike in personal insolvencies. In the context of the recent recession it is important to understand how increases in personal indebtedness may spillover into increases in social problems like crime. This paper uses data available at the neighbourhood level for London, UK on county court judgments (CCJ’s) granted against residents in that neighbourhood, this is our measure of personal indebtedness, and examines the relationship between a range of community characteristics (economic, socio-economic, etc), including the number of CCJ’s granted against residents, and the observed pattern of theft crimes for three successive years using spatial econometric methods. Our results confirm that theft crimes in London follow a spatial process, that personal indebtedness is positively associated with theft crimes in London, and that the covariates we have chosen are important in explaining the spatial variation in theft crimes. We identify a number of interesting results, for instance that there is variation in the impact of covariates across crime types, and that the covariates which are important in explaining the pattern of each crime type are largely stable across the three periods considered in this analysis.
    Keywords: Spatial econometrics; Theft crime; Personal debt default; Economic conditions
    JEL: R1 K42 C11 C21
    Date: 2013–09
  7. By: Stefania Marcassa (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: At the end of the 1960s, the U.S. divorce law underwent major changes and the divorce rate almost doubled in all of the states. This paper shows that changes in property division, alimony transfers, and child custody assignments account for a substantial share of the increase in the divorce rate, especially for young, college educated couples with children. I solve and calibrate a model where agents make decisions on their marital status, savings, and labor supply. Under the new financial settlements, divorced men gain from a higher share of property, while women gain from an increase in alimony and child support transfers. The introduction of the unilateral decision to divorce has limited effects.
    Date: 2013–08–28
  8. By: Yoan Hermstrüwer (Max Planck Institute for Research on Collective Goods, Bonn); Stephan Dickert (Vienna University of Economics and Business, Institute for Marketing and Consumer Research)
    Abstract: Privacy law relies on the argument that consent does not entail any relevant impediments for the liberty of the consenting individual. Challenging this argument, we experimentally investigate whether consent to the publication of personal information in cyberspace entails self-coercion on a social norm level. Our results suggest that the monetary benefits from consent constitute a price that people are willing to accept for increased compliance with social norms. Providing people with a prior consent option is sufficient to generate chilling effects (i.e., a reduction of norm-deviant behavior). However, nudging people towards potential publicity does not increase the value they place on privacy. We also test how the default design of the right to deletion of personal information (right to be forgotten) affects chilling effects and privacy valuations. Surprisingly, the right to be forgotten does not reduce chilling effects. Moreover, individuals tend to stick with the status quo of permanent information storage.
    Keywords: Social Norms, Nudges, Behavioral Law and Economics of Privacy, Consent, Right to Be Forgotten, Dictator Games
    JEL: C93 C91 A13 D03 K29
    Date: 2013–08
  9. By: Alexander Hijzen; Leopoldo Mondauto; Stefano Scarpetta
    Abstract: This paper analyses the impact of employment protection (EP) on the composition of the workforce and worker turnover using a unique firm-level dataset for Italy. The impact of employment protection is analysed by means of a regression discontinuity design (RDD) that exploits the variation in EP provisions across firms below and above a size threshold. Using our RDD approach, we show that EP increases worker reallocation, suggesting that EP tends to reduce rather to increase worker security on average. We further show that this can be entirely explained by the fact that firms facing more stringent EP make a greater use of workers on temporary contracts. Our preferred estimates suggest that the discontinuity in EP increases the incidence of temporary work by 2-2.5 percentage points around the threshold. Moreover, further analysis suggests that the effect of employment protection persists among larger firms well beyond the threshold and may account for about 20% of the overall incidence of temporary work. There is also evidence that EP reduces labour productivity and this effect is to an important extent due to the impact of EP on worker reallocation and the incidence of temporary work. Cet article analyse l'impact de la protection de l'emploi (PE) sur la composition de la main-d’oeuvre et la rotation des travailleurs en utilisant un ensemble unique de données au niveau des entreprises pour l'Italie. L'impact de la protection de l'emploi est analysé au moyen d’une méthode de régression par discontinuité (RD) qui exploite la variation des dispositions de la PE entre les entreprises de taille inférieure ou supérieure à un certain seuil. À l’aide de notre approche RD, nous montrons que la PE accroît la réallocation des travailleurs, indiquant que la PE a tendance, en moyenne, à réduire plutôt qu’à accroître la sécurité de l’emploi des travailleurs. Nous montrons de plus que cela peut être entièrement expliqué par le fait que les entreprises confrontées à une PE plus stricte recourent plus largement à des travailleurs sous contrats temporaires. Nos estimations privilégiées suggèrent que la discontinuité de la PE augmente l'incidence du travail temporaire de 2 à 2,5 points de pourcentage autour de la valeur seuil. En outre, une analyse plus détaillée suggère que l'effet de la protection de l'emploi persiste parmi les grandes entreprises bien au-delà du seuil et peut représenter environ 20% de l'incidence globale du travail temporaire. Il semble également que la PE réduit la productivité du travail et que cet effet est dans une large mesure dû à l'impact de la PE sur la réallocation des travailleurs et l'incidence du travail temporaire.
    Keywords: employment protection, worker reallocation, temporary work contract, labour market duality
    JEL: J42 J63 J65
    Date: 2013–07–04
  10. By: Ojo, Marianne
    Abstract: This paper not only addresses how linkages, direct and facilitating linkages, can benefit microfinance institutions – and particularly in jurisdictions where the Savings Group Outreach involvement is particularly low, but also illustrates ways and means whereby group lending and other more recent innovative methods used by micro lenders to secure repayments, could increase the desired effects, efficiency and impact of microfinance in selected jurisdictions. In so doing, it addresses some of the existing and persisting problems of micro finance in rural areas. An innovative aspect of the paper is evidenced through its recommendation of the Micro-Savings Requirement Scheme - which offers numerous benefits – as will be highlighted in this paper.
    Keywords: microfinance; regulation; agency theory; Micro-Savings Requirement Scheme
    JEL: E2 E6 G2 G21 G23 G28 K2
    Date: 2013–09–18
  11. By: Hallward-Driemeier, Mary; Hasan, Tazeen; Rusu, Anca Bogdana
    Abstract: This study uses a newly compiled database of women's property rights and legal capacity covering 100 countries over 50 years to test for the impact of legal reforms on employment, health, and education outcomes for women and girls. The database demonstrates gender gaps in the ability to access and own property, sign legal documents in one's own name, and have equality or non-discrimination as a guiding principle of the country's constitution. In the initial period, 75 countries had gender gaps in at least one of these areas and often multiple ones. By 2010, 57 countries had made reforms that strengthened women's economic rights, including 28 countries that had eliminated all of the constraints monitored here. In the cross-section and within countries over time, the removal of gender gaps in rights is associated with greater participation of women in the labor force, greater movement out of agricultural employment, higher rates of women in wage employment, lower adolescent fertility, lower maternal and infant mortality, and higher female educational enrollment. This paper provides evidence on how the strengthening of women's legal rights is associated with important development outcomes.
    Keywords: Gender and Law,Population Policies,Access to Finance,Legal Products,Labor Policies
    Date: 2013–09–01
  12. By: Asongu Simplice (Yaoundé/Cameroun); Oasis Kodila-Tedika (Kinshasa, Democratic Republic of Congo)
    Abstract: Crimes and conflicts are seriously undermining African development. This article assesses the best governance tools in the fight against the scourges. The following findings are established. (1) Democracy, autocracy and voice & accountability have no significant negative correlations with crime. (2) The increasing relevance of government quality in the fight is as follows: regulation quality, government effectiveness, political stability, rule of law and corruption-control. (3) Corruption-control is the most effective mechanism in fighting crime (conflicts). The findings are significantly strong when controlling for age dependency, number of police (and security) officers, per capita economic prosperity, educational level and population density. Justifications for the edge of corruption-control (as the most effective governance tool) and policy implications are discussed.
    Keywords: Security; Governance; Conflicts; Crime; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2013–01–20

This issue is ©2013 by Eve-Angeline Lambert. 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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