nep-law New Economics Papers
on Law and Economics
Issue of 2014‒11‒28
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. There will be blood: Crime rates in shale-rich U.S. counties By Alexander James; Brock Smith
  2. The Effect of Labour Relations Laws on Union Density Rates: Evidence from Canadian Provinces. By Scott Legree, Tammy Schirle, Mikal Skuterud
  3. The Effect of Substance Use Disorder Treatment Use on Crime: Evidence from Public Insurance Expansions and Health Insurance Parity Mandates By Hefei Wen; Jason M. Hockenberry; Janet R. Cummings
  4. The discontent cartel member and cartel collapse: The case of the German cement cartel By Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich; Smuda, Florian
  5. Essays on Temporary Work Agencies and the Economic Analysis of Law By Westéus, Morgan
  6. Economics and Genocide: Choices and Consequences By Charles Anderton; Jurgen Brauer
  7. Market competition and abatement technology diffusion under environmental liability law By Li, Yi
  8. The impact of corruption on apprehension level of immigrants: A study of the United States immigration By Buzurukov, Bilol; Lee, Byeong Wan
  9. Adam Smith's "Tolerable Administration of Justice" and the Wealth of Nations By Douglas A. Irwin

  1. By: Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage); Brock Smith (Center for the Analysis of Resource Rich Economies, Department of Economics, University of Oxford)
    Abstract: Over the past decade, the production of shale oil and gas significantly increased in the United States. This paper uniquely examines how this energy boom has affected regional crime rates throughout the United States. There is evidence that, as a result of the ongoing shale-energy boom, shale-rich counties experienced faster growth in rates of both property and violent crimes including rape, assault, murder, robbery, burglary, larceny and grand-theft auto. These results are particularly robust for rates of assault, and less so for other types of crimes. Examining the migratory behavior of convicted sex offenders indicates that boomtowns disproportionately attract convicted felons. Policy makers should anticipate these effects and invest in public infrastructure accordingly.
    Keywords: Natural Resources, Hydraulic Fracturing, Crime, Resource Curse
    JEL: Q3 R11 K42
    Date: 2014–09
  2. By: Scott Legree, Tammy Schirle, Mikal Skuterud (Wilfrid Laurier University)
    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 driven 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.
    Keywords: Unions, labour relations, Canada
    JEL: J52 J53 K31
    Date: 2014–09–08
  3. By: Hefei Wen; Jason M. Hockenberry; Janet R. Cummings
    Abstract: We examine the effect of increasing the substance use disorder (SUD) treatment rate on reducing violent and property crime rates, based on county-level panels of SUD treatment and crime data between 2001 and 2008 across the United States. To address the potential endogeneity of the SUD treatment rate with respect to crime rate, we exploit the exogenous variation in the SUD treatment rate induced by two state-level policies, namely insurance expansions under the Health Insurance Flexibility and Accountability (HIFA) waivers and parity mandates for SUD treatment. Once we address the endogeneity issue, we are able to demonstrate an economically meaningful reduction in the rates of robbery, aggravated assault and larceny theft attributable to an increased SUD treatment rate. A back-of-the-envelope calculation shows that a 10 percent relative increase in the SUD treatment rate at an average cost of $1.6 billion yields a crime reduction benefit of $2.5 billion to $4.8 billion. Our findings suggest that expanding insurance coverage and benefits for SUD treatment is an effective policy lever to improve treatment use, and the improved SUD treatment use can effectively and cost-effectively promote public safety through crime reduction.
    JEL: I11 I13 K14 K42
    Date: 2014–10
  4. By: Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich; Smuda, Florian
    Abstract: We hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics. The cartel instability is rooted in the observation that, upon cartel formation, the relative positions of firms are often fixed which may lead some growthconscious members to be discontent. This incongruity between a cartel member's allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel. This hypothesis is then taken to the German cement cartel of 1991-2002. We argue that Readymix was such a discontent cartel member and, using a rich pricing data set, are able to characterize how Readymix deviated, how other firms responded, and how it led to the collapse of the cartel.
    Keywords: collusion,cartel,antitrust enforcement,cement
    JEL: L41 K21
    Date: 2014
  5. By: Westéus, Morgan (Department of Economics, Umeå School of Business and Economics)
    Abstract: Paper [I] adds to the theoretical literature on the incentives of Temporary Work Agencies (TWAs). Using a principal-agent model with hidden action to model two main types of contracts between a TWA and a Client Firm (CF), the TWA is shown to potentially act against the best interest of the CF when helping to fill a vacant position. The results also suggest that the adverse effect of the incentive misalignment is larger when the worker is going to be leased instead of hired by the CF. However, this effect could potentially be offset by introducing a sufficient level of competition among the TWAs. <p> Paper [II] uses individual-level data on young adults to estimate how the probability of being employed in the Swedish temporary agency sector is affected by whether a partner or other family member has experience of temporary agency work. The results show a significant effect from all peer groups of a magnitude that correspond to the other most influential control variables. We also find that this cohort of the agency sector has a relatively high education level compared to the regular sector, and that there are predominately men working in this sector. <p> Paper [III] analyses possible effects on total employment, and the distribution between agency work and regular contracts as a consequence of the implementation of the EU Temporary and Agency Workers Directive in Sweden. The analysis is based on changes in the compensation to agency workers in a calibrated extension of a Mortensen-Pissarides search model. Even though the results suggest a negative net effect on total employment, the implementation is shown to increase (utilitarian) welfare, and an increased transition probability from the agency sector into regular employment will increase welfare even further. <p> Paper [IV] focuses on settlement probabilities for different types of representation within the Swedish Labour Court. Empirical estimates on a set of unjust dismissal cases show that private representatives are generally less likely to reach a settlement than their union counterparts. The settlement probabilities converge following court-mandated information disclosure, which suggests that information asymmetry is an important factor in explaining differences in settlement behaviour. Privately instigated negotiations are therefore in general insufficient for making cases with non-union representation reach the same settlement rate as cases with union representation.
    Keywords: Temporary work agency; family work experience; young adults; Sweden; labour law; EU directive; unemployment; unjust dismissals; negotiations; settlements; labour unions
    JEL: D81 D82 E24 J12 J21 J41 J42 J44 J48 J52 J64 J82 K31 K41
    Date: 2014–11–12
  6. By: Charles Anderton (Department of Economics and Accounting, College of the Holy Cross); Jurgen Brauer (Hull College of Business, Georgia Regents University)
    Abstract: This paper provides an overview of genocide and international law concerning genocide.
    Keywords: Genocide, International law
    JEL: K4
    Date: 2014–11
  7. By: Li, Yi
    Abstract: One challenge in environmental liability law is to apportion the liability appropriately among multiple parties, when these multiple parties generate a single and non-separable damage. This paper provides a method of designing efficient apportionment rule in the presence of product market competition. In particular, I examine the role of apportionment rule in inducing abatement technology diffusion between competing firms. I show that such diffusion can be induced by an efficient apportionment rule. And this apportionment rule allocates a relatively large (more than 1/2) portion of the liability to the firm which originally owns the abatement technology. Furthermore, allocating the liability equally between the firms cannot induce diffusion.
    Keywords: Environmental liability law, Apportionment rule, Diffusion, Competition, Environmental Economics and Policy, Industrial Organization,
    Date: 2014
  8. By: Buzurukov, Bilol; Lee, Byeong Wan
    Abstract: This paper demonstrates the effect of country level corruption on illicit behavior of individuals in a foreign country. The empirical research investigates the probability of individuals being apprehended overseas due to the influence of corrupt environment in their home countries. Using cross-sectional data for empirical analysis from 104 different countries over the period of 2009-2011, the authors focused on finding how people from various countries act and behave differently while stationing outside of their home countries. Their findings reveal some evidences that individuals coming to the United States from corruption-ridden countries are more likely to be apprehended than individuals from less corrupt countries are.
    Keywords: immigration,corruption,apprehension
    JEL: F22 D73 K42
    Date: 2014
  9. By: Douglas A. Irwin
    Abstract: In the Wealth of Nations, Adam Smith argues that a country's national income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith's answer, in an important but neglected theme of his work, is the security of property rights that enable individuals to "secure the fruits of their own labor" and allow the division of labor to occur. Countries that can establish a "tolerable administration of justice" to secure property rights and allow investment and exchange to take place will see economic progress take place. Smith's emphasis on a country's "institutions" in determining its relative income has been supported by recent empirical work on economic development.
    JEL: B12 B25 B31 K2 O43 P14 P16 P48
    Date: 2014–10

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