nep-law New Economics Papers
on Law and Economics
Issue of 2014‒09‒29
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Tax Evasion by Individuals By Laszlo Goerke
  2. Estimating the impact of Mexican drug cartels on crime By Roxana Gutierrez-Romero; Alessandra Conte
  3. A Right to Enjoy Culture in Face of Climate Change: Implications for "Climate Migrants" By Margaretha Wewerinke
  4. Vigilante Justice and Police Protocols in the Latin American South Cone By Fernando Borraz; Cecilia Chouhy; Irene Mussio; Máximo Rossi
  5. The Effect of Labour Relations Laws on Union Density Rates: Evidence from Canadian Provinces By Scott Legree; Tammy Schirle; Mikal Skuterud
  6. Using Remedies In Russian Merger Control By Anastasiya Redkina
  7. Life-care Awards in the Age of the Affordable Care Act By Joshua Congdon-Hohman; Victor Matheson
  8. Managerial Optimism and Debt Contract Design: The Case of Syndicated Loans By Adam, Tim R.; Burg, Valentin; Scheinert, Tobias; Streitz, Daniel
  9. Political Institutions and Corruption:An Experimental Examination of the "Right to Recall" By Sarah Mansour; Vjollca Sadiraj; Sally Wallace
  10. The Impact of Minimum Wages on Investment and Employment in Indonesia By Andi Sukmana; Ichihashi Masaru

  1. By: Laszlo Goerke (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: The basic deterrence model of tax evasion is described, its main predictions are derived and limitations and flexibility are outlined. Further, the model is interpreted in light of some key institutional features characterising tax enforcement in OECD countries. Throughout the survey, findings originating from the deterrence model are contrasted with predictions which result from a simple model of criminal activity and law enforcement.
    Keywords: Economics of Crime, Income Tax, Tax Evasion
    JEL: H24 H26 K34
    Date: 2014–08
  2. By: Roxana Gutierrez-Romero (Departament d’Economia Aplicada, Universitat Autonama de Barcelona); Alessandra Conte (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: We estimate the impact of drug cartels and drug-related homicides on crime and security perceptions in Mexico. For this purpose, we combine surveys on crime victimization with indicators of where drug cartels operate with and without drug-related homicides. Using the difference-in-difference estimator, we find that people living in areas that experienced drug-related homicides are more likely to take extra precautions to guard their security, yet these areas also more likely to experience some crimes, particularly thefts and extortions. In contrast, these crimes and perceptions of unsafety do not change in areas where cartels operate without leading to drug-related homicides.
    Keywords: Crime, difference-in-difference, instrumental variables, Mexico
    JEL: K49 O17 R59 C26
    Date: 2014–09
  3. By: Margaretha Wewerinke (Cambridge Centre for Climate Change Mitigation Research, Department of Land Economy, University of Cambridge; European University Institute, Florence, Italy)
    Abstract: This paper considers the extent to which international human rights law offers protection to "climate migrants" irrespective of whether these persons would qualify for refugee status. In contrast with most existing literature, it does not focus on States’ obligations arising from the right to life or the prohibition of inhumane treatment. Instead, the paper focuses on the right of persons belonging to minorities to enjoy their culture as protected under Article 27 of the International Covenant on Civil and Political Rights. The paper peruses the Human Rights Committee's interpretation of Article 27, with particular attention to its link with the rights of peoples to self-determination and to freely dispose of their natural wealth and resources as protected under Article 1 of the Covenant. Based on this analysis the paper challenges the presupposition that a normative gap exists, pointing instead at a need for further research into the interpretation of norms and obstacles to enforcement.
    Keywords: Cultural rights, Human rights, Climate change, International Law
    JEL: K32 K33
    Date: 2013–12
  4. By: Fernando Borraz (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.); Cecilia Chouhy (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.); Irene Mussio (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.)
    Abstract: There is a wide debate worldwide, and particularly in Latin America with respect to citizen insecurity and the proliferation of more punitive claims from the society itself. In this article we analyze the attitude of the citizens belonging to the countries of the Latin American South Cone towardsmaintaining the law regarding persecuting and punishing criminals. In particular, we tackle the approval of vigilante justice in some circumstances and the justification of police procedures outside the law as a form of guaranteeing the capture of criminals. For this, we use the LAPOP (Latin American Public Opinion Project, Vanderbilt University) database from the year 2008. Analyzing the data using probit estimations, we observe that the approval of vigilante justice is related to the experience and particular situation of the respondent. In this sense, having beenvictimized in the last months and feeling unsafe in his or her own neighborhood increase the probability of taking that position regarding vigilantism. On the other side, sticking to police procedures is more strongly related to the general political beliefs and the level of concern for the respondents' insecurity. These findings indicate that the formation of these beliefs has a differential dynamic and that when actions outside the law have to be justified, this is distinguished based on the type of involved action and the actorwho carries it forward.
    Keywords: vigilantism, police procedures, law, South Cone, justice
    JEL: K4 K14 P37
    Date: 2013–08
  5. By: Scott Legree (Department of Economics, University of Waterloo); Tammy Schirle (Department of Economics, Wilfrid Laurier University); Mikal Skuterud (Department of Economics, University of Waterloo)
    Abstract: We provide evidence on the potential for reforms in labour law to reverse deunionization trends by relating an index of the favorability to unions of Canadian provincial labour relations statutes to changes in provincial union density rates between 1981 and 2012. The results suggest that shifting every province’s 2012 legal regime to the most union-friendly possible could raise the national union density by up to 7 percentage points in the long run. This effect appears by regulations related to the certification of new bargaining units, the negotiation of first contracts and the recruitment of replacement workers. The effects of reform are largest for women, particularly university-educated women employed as professionals in public services. Overall, the results suggest a limited potential for labour relations reforms to address growing concerns about labour market inequality.
    Date: 2014–09
  6. By: Anastasiya Redkina (National Research University Higher School of Economics)
    Abstract: This article is motivated by a growing interest in the problem of merger control quality assessment. Remedies are one of the instruments of merger control and have a significant influence on the results of it. This paper aims to build and empirically evaluate a discrete choice model of merger remedies implementation in Russian merger control. The database consists of 443 merger cases accepted by the Russian antimonopoly agency between 2008 and 2011. We analyse the agency’s decisions to find which characteristics of merging firms and markets lead the Federal Antimonopoly Service to decide whether to allow conditional acceptance. We find that variables related to high market power lead more frequently to a remedy outcome. Such industries as the energy sector, communications and insurance positively affect the probability of a structural remedy. We do not find significant effects of “non-structural” variables, such as the world leader and the nationality of the firm-buyer
    Keywords: merger control, behavioural and structural remedies, discrete choice models
    JEL: K21 L40 D78
    Date: 2014
  7. By: Joshua Congdon-Hohman (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: Prior to January 1, 2014, it would have been reasonable to assume that persons injured in an act of negligence would be forced to pay for their future medical care costs out-of-pocket rather than being able to rely on health insurance. The passage of the Affordable Care Act (ACA) has the potential to radically change how victims pay for future medical expenses, and now nearly every tort award that provides money to the plaintiff for the full payment of medical costs without consideration of the availability of health insurance will serve to overcompensate victims for their expected medical costs. New statutory or judicial rulings regarding subrogation and the collateral source rule appear to be required in order to simultaneously achieve the twin goals of making a tortfeasor pay for their damages while also making the victim whole.
    Keywords: Affordable Care Act, forensic economics, tort awards, lawsuits, health insurance
    JEL: I13 I18 K41
    Date: 2014–09
  8. By: Adam, Tim R.; Burg, Valentin; Scheinert, Tobias; Streitz, Daniel
    Abstract: We examine the impact of managerial optimism on the inclusion of performance-pricing provisions in syndicated loan contracts (PSD). Optimistic managers may view PSD as a relatively cheap form of financing given their upwardly biased expectations about the firm’s future cash flow. Indeed, we find that optimistic managers are more likely to issue PSD, and choose contracts with greater performance-pricing sensitivity than rational managers. Consistent with their biased expectations, firms with optimistic managers perform worse than firms with rational managers after issuing PSD. Our results indicate that behavioral aspects can affect contract design in the market for syndicated loans.
    Keywords: Optimism Bias; Performance-Sensitive Debt; Debt Contracting; Syndicated Loans
    JEL: G02 G30 G31 G32
    Date: 2014–07–23
  9. By: Sarah Mansour; Vjollca Sadiraj; Sally Wallace
    Abstract: Countries around the world are concerned with corruption as it potentially undermines confidence in government and may reduce the efficiency of public goods provision. While there has been a significant amount of research devoted to identifying the causes of corruption there has been little empirical research on the impact of political institutions on corruption. Given that many nascent governments are establishing new political systems, the time is right for understanding the role that political institutions may play in enhancing or mitigating corruption. This paper uses a series of laboratory experiments to examine the impact of the right to recall government officials' on the level of government corruption. We find experimental evidence suggesting that such an institution can decrease the level of corruption in government through the increased accountability it imposes on elected politicians, and equity of the system, in terms of income distribution, may also be enhanced.
    Keywords: Political economy, corruption, transition economies, experiment, public goods
    Date: 2014–09
  10. By: Andi Sukmana (Graduate School for International Development and Cooperation, Hiroshima University); Ichihashi Masaru (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: The labor market in Indonesia cannot absorb all of the labor force available, which allows employers to have greater bargaining power over employees. To protect and to increase labor welfare, the government issued minimum wages regulation. Although the purposes of the minimum wage policy were widely accepted, there is great disagreement about whether the minimum wage is effective in achieving its objectives. We found that the minimum wage policy in Indonesia has a positive impact on the average wage. 1 percent of the increase of the minimum wage will increase the average wage by 0.71-0.98 percent. The minimum wage has a negative impact on employment to the working age population ratio. 1 percent of the increase of the minimum wage will decrease the employment to population ratio by 0.62?0.76 percent. The minimum wage only affects total investment. Total investment will decrease 0.09% if the minimum wage increases by 1%.
    Keywords: Average Wage, Employment, Investment, Labor, Minimum Wage
    Date: 2014–09

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