nep-law New Economics Papers
on Law and Economics
Issue of 2014‒09‒08
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Effects of Punishment of Crime in Colombia on Deterrence, Incapacitation, and Human Capital Formation By Arlen Guarin; Carlos Medina; Jorge Andres Tamayo
  2. Supremacy, Direct Effect, and Dairy Products in the Early History of European law By William Phelan
  3. Crime, Punishment, and Schooling Decisions: Evidence from Colombian Adolescents By Ana Maria Ibanez; Catherine Rodriguez; David Zarruk
  4. The Effect of Rehabilitative Punishments on Juvenile Crime and Labor Market Outcomes By Huttunen, Kristiina; Kerr, Sari Pekkala; Mälkönen, Ville
  5. Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program By Wright, Richard; Tekin, Erdal; Topalli, Volkan; McClellan, Chandler; Dickinson, Timothy; Rosenfeld, Richard
  6. The cost of crime in Uruguay By Diego Aboal; Jorge Campanella; Bibiana Lanzilotta
  7. Are We All Playing the Same Game? The Economic Effects of Constitutions Depend on the Degree of Institutionalization By German Caruso; Carlos Scartascini; Mariano Tommasi
  8. The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared By Svetlana B. Avdasheva; Dina V. Tsytsulina
  9. On the Distributive Costs of Drug-Related Homicides By Nicolas Ajzenman; Sebastian Galiani; Enrique Seira

  1. By: Arlen Guarin; Carlos Medina; Jorge Andres Tamayo
    Abstract: Using individual data on persons arrested in the Medellin Metropolitan Area, this paper assesses whether the change in punishment at age 18, mandated by law, has a deterrent effect on arrests. No deterrent effect was found on index, violent or property crimes, but a deterrence effect was found on non-index crimes, specifically those related to drug consumption and trafficking. The change in criminal penalties at 18 years of age does not explain future differences in human capital formation among the population that had been arrested immediately after versus immediately before reaching 18 years of age. There is no evidence that the longer length of time to recidivate on the part of individuals arrested for the first time immediately after reaching 18 implies future differences in human capital formation. These results suggest a specific deterrence effect resulting from the harsher experience while in prison of those arrested right after reaching 18.
    JEL: D19 J24 K14 K42
    Date: 2013–07
  2. By: William Phelan (Institute for International Integration Studies, Trinity College Dublin)
    Abstract: As the ECJÕs two most famous decisions, Van Gend en Loos and Costa v. ENEL, which established the direct effect and supremacy of European law, are commemorated on their fiftieth anniversaries, attention has also turned to another of the ECJÕs early decisions. On 13th November 1964, in Commission v. Luxembourg & Belgium, the Dairy Products case, the ECJ rejected the use of Ôself-helpÕ countermeasures in the Community legal order, and therefore marked the fundamental distinction between European law and general international law. Drawing on writings by Robert Lecourt, Paul Reuter, and Paul Kapteyn, this paper demonstrates that a direct causal link between these three cases was recognized by ECJ judges and legal scholars as early as 1965. The historical evidence presented here therefore supports previous comparative analysis that has argued that these three decisions Ð Van Gend, Costa, and Luxembourg & Belgium Ð should be acknowledged as profoundly inter-connected, in that national court application of European obligations should be understood as a substitute for the enforcement of European obligations through inter-state countermeasures.
    Keywords: European Law, International Law, History of European Law, Van Gend en Loos, Costa v ENEL, Commission v Luxembourg and Belgium
    Date: 2014–08
  3. By: Ana Maria Ibanez; Catherine Rodriguez; David Zarruk
    Abstract: This paper uses a natural policy experiment to estimate how changes in the costs of engaging in criminal activity may influence adolescents' decisions in crime participation and school attendance. The study finds that, after an exogenous decrease in the severity of judicial punishment imposed on Colombian adolescents, crime rates in Colombian municipalities increased. This effect appears to be larger in municipalities with a higher proportion of adolescents between 14 and 15 years of age. The study provides suggestive evidence that one possible transmission channel for this effect is a decrease in the effort of the police force to capture teenage suspects. The study also finds that the probability that boys of this same age group attend school decreased following the change in the juvenile justice system. This effect is stronger for boys from homes where the heads of household are less educated.
    JEL: D19 I25 K14
    Date: 2013–06
  4. By: Huttunen, Kristiina (Aalto University); Kerr, Sari Pekkala (Wellesley College); Mälkönen, Ville (Nordic Investment Bank)
    Abstract: This paper estimates the effect of a rehabilitative punishment on the post-release outcomes of juvenile criminals using a unique Finnish data set on sentences and punishments merged with the longitudinal population census for 1990-2007. The rehabilitative program was aimed at improving the social skills and labor market attachment of young offenders aged 15 to 17. A variety of research designs are used to isolate the effect of the juvenile punishment and to control for observable characteristics of the young offenders. The juvenile punishment experiment was initially conducted in certain criminal courts only and was applicable for youths aged under 18, giving rise to a differences-in-differences and triple differences setup. The juvenile punishment reduced reoffending during the year immediately after sentencing, but had no long-term effect on reoffending nor on labor market outcomes.
    Keywords: juvenile crime, punishments, rehabilitation, recidivism, earnings, employment
    JEL: K14 K42 J29
    Date: 2014–08
  5. By: Wright, Richard (Georgia State University); Tekin, Erdal (American University); Topalli, Volkan (Georgia State University); McClellan, Chandler (National Bureau of Economic Research); Dickinson, Timothy (University of Missouri-St. Louis); Rosenfeld, Richard (University of Missouri-St. Louis)
    Abstract: It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare program benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we investigate whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline.
    Keywords: crime, cash, EBT, welfare, economy
    JEL: H53 I38 J22 K42
    Date: 2014–08
  6. By: Diego Aboal; Jorge Campanella; Bibiana Lanzilotta
    Abstract: This paper uses cost accounting to estimate some of the costs associated with criminal activity and violence in Uruguay. Among the costs being considered are those of security and crime prevention; justice; incarceration and rehabilitation of prisoners; stolen goods; health care and loss of life resulting from violence; and costs associated with prisoners' loss of productive time while in prison. A variety of methodologies and sources of information were utilized to calculate these cost estimates. Although a significant range of costs has been covered, the cost of crime as a whole has not been accounted for due to limited information. Consequently, cost estimates must be interpreted as a minimum benchmark. The total estimated cost for 2010 in Uruguay comes to 3. 1 percent of gross domestic product (GDP).
    JEL: D60 H50 I31 K14
    Date: 2013–04
  7. By: German Caruso; Carlos Scartascini; Mariano Tommasi
    Abstract: The understanding of the economic effect of formal institutional rules has progressed substantially in recent decades. These formal analyses have tended to take for granted that institutional arenas such as Congress are the places where decision-making takes place. That is a good approximation in some cases (such as many developed countries today) but not in others. If countries differ in how institutionalized their policymaking is, it is possible that the impact of formal political rules on policy outcomes might depend on that. This paper explores that hypothesis and finds that some important claims regarding the impact of constitutions on policy outcomes do not hold for countries in which institutionalization is low. The findings suggest the need to develop a broader class of policymaking models in which the degree to which decision-making follows 'the rules' is also endogenized.
    JEL: D72 D73 D78 H20 H60 H62
    Date: 2013–07
  8. By: Svetlana B. Avdasheva (National Research University Higher School); Dina V. Tsytsulina (National Research University Higher School)
    Abstract: There is little evidence on the comparative effectiveness of different competition policy measures, especially in transition economies. This research represents the effort to expand the financial event study method for the assessment of different competition policy measures: merger control, antitrust investigations on abuse of dominance, and changes of import tariffs in the Russian ferrous and non-ferrous metals markets from 2007 to 2012. According to the reaction of financial market, mergers between Russian metal producers restrict competition and reduce consumer welfare. Antitrust investigations have a positive effect on stock prices of buyers of metal and no significant impact on the market valuation of target of investigation. Changes in import tariffs have a positive significant impact on the company stock prices. The sign of each effect allows the comparison of different measures of competition policy.
    Keywords: competition policy, event studies, Russia, metal markets
    JEL: L40 G14
    Date: 2014
  9. By: Nicolas Ajzenman; Sebastian Galiani; Enrique Seira
    Abstract: There are few reliable estimates of the effects of violence on economic outcomes. This study exploits the manifold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug- related homicides on housing prices. Using an unusually rich dataset that provides national coverage on housing prices and homicides and exploits within- municipality variation, the study finds that the burden of violence affects only the poor. An increase in homicides equivalent to one standard deviation leads to a 3 percent decrease in low-income housing prices. Moreover, the effect on housing prices of long-term increases in crime is 40 percent larger.
    JEL: I3 K4
    Date: 2014–01

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