nep-law New Economics Papers
on Law and Economics
Issue of 2015‒07‒11
nineteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The changing returns to crime: do criminals respond to prices? By Mirko Draca; Theodore Koutmeridis; Stephen Machin
  2. Unregulated high seas fisheries: the “interlopers” issue By Manuel P. Coelho; José B. Filipe; Manuel A. Ferreira
  3. Education and criminal behavior: insights from an expansion of upper secondary school By Åslund, Olof; Grönqvist, Hans; Hall, Caroline; Vlachos, Jonas
  4. Labour law reforms in Europe: adjusting employment protection legislation for the worse? By Isabelle Schömann
  5. How crime affects the economy: evidence from Italy By Naddeo, Andreina
  6. Crime and the Economy in Mexican States : Heterogeneous Panel Estimates (1993-2012) By Verdugo-Yepes, Concepción; Pedroni, Peter; Hu, Xingwei
  7. Has the EU become more intrusive in shaping national welfare state reforms? Evidence from Greece and Portugal By Sotiria Theodoropoulou
  8. Integrating social and environmental dimensions in public procurement: one small step for the internal market, one giant leap for the EU? By Eric van den Abeele
  9. The Unintended Effects of Increasing the Legal Working Age on Family Behavior By Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall-Castello
  10. Online Copyright Enforcement, Consumer Behavior, and Market Structure By Luis Aguiar; Jorg Claussen; Christian Peukert
  11. Innovations of corporate legislation and regulation: changes in the Civil Code and the new Code of Corporate Governance in Russia in 2014 By Elena Apevalova; Natalia Polezhaeva
  12. The EU's REFIT strategy: a new bureaucracy in the service of competitiveness? By Eric van den Abeele
  13. Dismissal Disputes and Endogenous Sorting By Garibaldi, Pietro; Pfann, Gerard A.
  14. Public Governance and Political Corruption: A Framework for Anticorruption Policy By Glória Texeira; Ary Ferreira da Cunha
  15. Accounting errors,financial information and presumption based taxation: the Portuguese case By António Martins; Cristina Sá
  16. Dismissal Disputes and Endogenous Sorting By Garibaldi, Pietro; Pfann, Gerard Antonie
  17. Do taxes affect firmsÕ asset write-downs? Evidence from discretionary write-downs of equity investments in Italy By Giampaolo Arachi; Valeria Bucci
  18. Tax evasion and tax fraud in the bankruptcy process: empirical evidence from Portugal By Ana Dinis; Cidália Lopes; Alexandre Silva
  19. Sheltered Income: Estimating Income Under-Reporting in Canada, 1998 and 2004 By Geoffrey R. Dunbar; Chunling Fu

  1. By: Mirko Draca; Theodore Koutmeridis; Stephen Machin
    Abstract: In economic models of crime individuals respond to changes in the potential value of criminal opportunities. We analyse this issue by estimating crime-price elasticities from detailed data on criminal incidents in London between 2002 and 2012. The unique data feature we exploit is a detailed classification of what goods were stolen in reported theft, robbery and burglary incidents. We first consider a panel of consumer goods covering the majority of market goods stolen in the crime incidents and find evidence of significant positive price elasticities. We then study a particular group of crimes that have risen sharply recently as world prices for them have risen, namely commodity related goods (jewellery, fuel and metal crimes), finding sizable elasticities when we instrument local UK prices by exogenous shifts in global commodity prices. Finally, we show that changes in the prices of loot from crime have played a role in explaining recent crime trends.
    Keywords: Crime; goods prices; metal crime; commodity prices
    JEL: K42
    Date: 2015–06
  2. By: Manuel P. Coelho (CIRIUS, SOCIUS; ISEG/Universidade de Lisboa;); José B. Filipe (2 UNIDE; ISCTE-IUL;); Manuel A. Ferreira (2 UNIDE; ISCTE-IUL;)
    Abstract: Illegal behaviour and public enforcement of law are important theoretical and empirical subjects for Economics. They were dormant in economic scholarship, until the article of Becker, 1968, “Crime and Punishment: An Economic Approach”. In the context of Fisheries Economics, the problem can be seen as an externality arising when exclusive property rights are absent. That absence depends on the costs of defining and enforcing exclusivity and the problem becomes more complex when fisheries are transboundary. The paper combines standard Economics of Fisheries analysis with the Theory of “Crime and Punishment”. The conclusions are used to discuss the so-called issue of “interlopers” in High Sea fisheries. The “unfinished business” of the Law of the Sea, that is, the imprecise definition of property rights in the areas of High Sea adjacent to Economic Exclusive Zones, were in the origin of a lot of “fish wars” in the nineties. The 1995 UN agreement on transboundary stocks and highly migratory species pretended to be a new form of cooperation, including the introduction of new forms of enforcement and compliance with the law, affecting fishing enterprises and convenience-flag vessels. However, with the legal procedures that were proposed, it seems broadly bounded, the potential effect of enforcement and regulation.
    Keywords: Fisheries, High Seas, Enforcement, Interlopers
    JEL: K42 Q22
    Date: 2015–02
  3. By: Åslund, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy); Grönqvist, Hans (SOFI, Stockholm University); Hall, Caroline (IFAU - Institute for Evaluation of Labour Market and Education Policy); Vlachos, Jonas (Department of Economics, Stockholm University)
    Abstract: We study the impact on criminal activity from a large scale Swedish reform of vocational upper secondary education, extending programs from two to three years and adding more general theoretical content. The reform directly concerns age groups where criminal activity is high and students who are highly overrepresented among criminal offenders. The nature of the reform and the rich administrative data allow us to shed light on several behavioral mechanisms. Our results show that the prolonged and more general education lead to a reduction in property crime, but no significant decrease in violent crime. The effect is mainly concentrated to the third year after enrollment, which suggests that being in school reduces the opportunities and/or inclinations to commit crime.
    Keywords: Education; delinquency
    JEL: K42
    Date: 2015–06–22
  4. By: Isabelle Schömann
    Abstract: This new working paper is intended to map reforms of employment protection law in the member states with the aim of addressing these legal changes in the context of the crisis, but also in the context of the deregulation agenda of the European Commission.
    Keywords: Collective bargaining, Labour law, Social dialogue
    Date: 2014–04
  5. By: Naddeo, Andreina
    Abstract: Italy represents an interesting case study for an empirical analysis of the impact of crime on economic performance. The country, in fact, presents considerable disparities among its regions in terms of economic outcomes and crime rates. The economic performance is measured using data on regional GDP per capita, while the crime variable is given by the homicides rate (attempted and committed) per 100,000 inhabitants. Data shows that crime is higher in regions characterized by low GDP per capita. This may be due to reverse causality. GDP per capita may be lower because of the large presence of crime and the high presence of crime can be due to the economic conditions of these regions. Baseline analysis with fixed effect model shows a small negative effect of crime on GDP per capita. Results change drastically when the potential endogeneity issue is addressed. Instrumenting crime with the effective abortion rate (similar to the one developed by Levitt, 2001) and using the Two Stage Least Square method, it emerges that if the homicides rate increases by 1% than the GDP will be lower of 0.32%. System GMM estimator is used to capture the effect of crime on economic growth. Results show that the growth rate will be reduced by 0.13% if homicides rate increases of 1%. Concluding, results indicate that crime substantially affects the level of GDP per capita and economic growth across Italian regions, especially in Southern Italy, thus finding one of the possible factors explaining the Italian dualism.
    Keywords: Crime, Economic Growth, Italy, Abortion, Organized crime
    JEL: K00 K42 O47
    Date: 2014–04
  6. By: Verdugo-Yepes, Concepción; Pedroni, Peter; Hu, Xingwei
    Abstract: This paper studies the transmission of crime shocks to the economy in a sample of 32 Mexican states over the period from 1993 to 2012. The paper uses a panel structural VAR approach which accounts for the heterogeneity of the dynamic state level responses in GDP, FDI and international migration flows, and measures the transmission via the impulse response of homicide rates. The approach also allows the study of the pattern of economic responses among states. In particular, the percentage of GDP devoted to new construction and the perception of public security are characteristics that are shown to be associated with the sign and magnitude of the responses of economic variables to crime shocks.
    Keywords: Crime, GDP, FDI, Panel Structural VAR
    JEL: C5 K42 O4
    Date: 2015–06
  7. By: Sotiria Theodoropoulou
    Abstract: This paper provides a comparative analysis of the Memorandums of understanding (MoUs) in Greece and Portugal in the areas of old-age pensions and labour market policies and shows that, compared to earlier economic governance instruments, the MoUs have entailed much greater interference in setting policy objectives, tighter surveillance and stricter enforcement.
    Keywords: Collective bargaining, Economic policy, Employment, Flexicurity, Industrial relations, Labour law, Social policy, Welfare state
    Date: 2014–09
  8. By: Eric van den Abeele
    Abstract: This working paper provides a legal analysis of the inclusion of social and environmental clauses in the modernisation of the EU's public procurement directives.
    Keywords: Environment, EU legislation, Labour law, Social policy
    Date: 2014–10
  9. By: Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall-Castello
    Abstract: We use an exogenous variation in the Spanish legal working age to investigate the ef-fect of education on fertility and infant health. The reform introduced in 1980 raised the minimum legal age to work from 14 to 16 years old. We show that the reform increased educational attainment, which led to 1786 more women remaining childless and 3307 less children being born in the 10 generations after the reform. These negative effects operate through a postponement of first births until an age where the catching up effect cannot take place. We show that woman’s marriage market is one channel through which education impacts fertility, delaying the age at which women marry for the first time and reducing the likelihood that a woman marries. Even more importantly, this postponement in fertility seems to be also detrimental for the health of their offspring at the moment of delivery. The reform caused 2,789 more children to be born with less than 37 weeks of gestation, 268 died during the first 24 hours of life and 4,352 were born with low birth weight. We are able to document two channels that contribute to the negative effects on infant health: the postponement in age of delivery as well as a higher employment probability of more educated women, which enhances unhealthier behaviors (smoking and drinking).
    Date: 2015–05
  10. By: Luis Aguiar (European Commission - JRC - IPTS); Jorg Claussen (Copenhagen Business School); Christian Peukert (University of Zurich)
    Abstract: Taking down copyright-infringing websites is a way to reduce consumption of pirated media content and increase licensed consumption. We analyze the consequences of the shutdown of the most popular German video streaming website - - in June 2011. Using individual-level clickstream data, we find that the shutdown led to significant but short-lived declines in piracy levels. The existence of alternative sources of unlicensed consumption, coupled with the rapid emergence of new platforms, led the streaming piracy market to quickly recover from the intervention and to limited substitution into licensed consumption. Our results therefore present evidence of a high elasticity of supply in the online movie piracy market, together with relatively low switching costs for users of copyright infringing platforms. The fact that the post-shutdown market structure was much more fragmented - and therefore more resistant to future interventions - further questions the effectiveness of the intervention.
    Keywords: Anti-Piracy Intervention, Copyright, Movie Industry, Natural Experiment
    JEL: K42 L82 O34 O38
    Date: 2015–01
  11. By: Elena Apevalova (RANEPA); Natalia Polezhaeva (RANEPA)
    Abstract: This paper deals with the issues of innovation in corporate legislation. The authors focus on the Civil Code reform and the new Code of Corporate Governance.
    Keywords: Russian economy; civil code, corporate governance legislation
    JEL: K11 K23
    Date: 2015
  12. By: Eric van den Abeele
    Abstract: This Working Paper provides a clear but critical assessment of the EU’s process of simplification and qualitative improvement of the ‘acquis’, a process originally known as ‘Better Law-making’, subsequently as ‘Smart regulation’ and, in its latest incarnation, as ‘Regulatory Fitness and Performance (REFIT)’.
    Keywords: EU legislation
    Date: 2014–09
  13. By: Garibaldi, Pietro (University of Turin); Pfann, Gerard A. (Maastricht University)
    Abstract: Dismissal disputes occur mostly in recessions and often lead to long and costly contract termination procedures. This paper investigates how dispute procedures may affect the job-matching process. First we present a simple accounting frame- work that corresponds with general dismissal legislation, but is sufficiently flexible to accommodate country-specific legislation. Detailed information from a sample of 2,191 disputes that occurred in the Netherlands between 2006 and 2009 is used to adjust the framework to Dutch institutional specificity. The resulting equilibrium matching model is solved to explain endogenous sorting between lengthy and costly firing procedures. The model also rationalizes the longevity of the dual Dutch model and its political resilience.
    Keywords: disputes, firing, legislation, sorting
    JEL: E24 J08 J38 K31
    Date: 2015–06
  14. By: Glória Texeira (Faculty of Law, University of Porto, Centre for Legal and Economic Research); Ary Ferreira da Cunha (Faculty of Law, University of Porto, Centre for Legal and Economic Research, Observatory of Economy and Management of Fraud)
    Abstract: In this paper we propose a framework of policies against political corruption. Though we have frameworks explaining the causes of corruption – mainly based on agency theory – and though many authors have considered the role of good governance in fighting corruption or the effectiveness of different anticorruption policies, we see that these branches of literature have yet not entered in dialogue to construct a framework for curbing political corruption. The framework is based on the contributions of agency theory to the field of corruption over the past decades. After all, if discretion, information asymmetries and non-coincidence of interests are the elements of agency contributing to corruption they must also be the fundamentals targeted by anticorruption policies. Based on an extensive literature survey we gather a large array of good governance policies shown to be effective against political corruption and consider how they fit in the framework. This framework may help decision makers, policy advisors, and civil society stakeholders understand and visualize their options, contributing to the construction of more comprehensive strategies.
    Keywords: Anticorruption Policy; Public Governance; Political Corruption
    JEL: O29 K42
    Date: 2015–02
  15. By: António Martins (University of Coimbra - School of Economics); Cristina Sá (Polytechnic Institute of Leiria - School of Technology and Management)
    Abstract: The purpose of this paper is to analyse the accounting and legal basis that justify the application of presumptions in the taxation corporate income.The connection between errors on recording transactions by the financial accounting system and the use of presumptions by tax authorities will be highlighted. The paper contributes to the literature by offering a systematic analysis of the criteria used by Portuguese tax courts to decide when accounting data can be disregarded by tax authorities and presumptions can therefore be used as a tax computation tool. Given that the general rule is to base taxable income on accounting records (albeit with adjustments established in Corporate Income Tax Code) presumptions are a striking exception to this well established rule. As such, tax researchers, tax authorities and taxpayers have a significant interest in knowing how do courts validate or deny tax authorities’ approach when using presumptions.
    Keywords: Accounting errors, taxation and presumptions, financial fraud
    Date: 2015–02
  16. By: Garibaldi, Pietro; Pfann, Gerard Antonie
    Abstract: Dismissal disputes occur mostly in recessions and often lead to long and costly contract termination procedures. This paper investigates how dispute procedures may affect the job-matching process. First we present a simple accounting framework that corresponds with general dismissal legislation, but is sufficiently flexible to accommodate country-specific legislation. Detailed information from a sample of 2,191 disputes that occurred in the Netherlands between 2006 and 2009 is used to adjust the framework to Dutch institutional specificity. The resulting equilibrium matching model is solved to explain endogenous sorting between lengthy and costly firing procedures. The model also rationalizes the longevity of the dual Dutch model and its political resilience.
    Keywords: Disputes; Firing; Legislation; Sorting
    JEL: E24 J08 J38 K31
    Date: 2015–07
  17. By: Giampaolo Arachi (Department of Management, Economics, Mathematics and Statistics; University of Salento); Valeria Bucci (Department of Management, Economics, Mathematics and Statistics; University of Salento)
    Abstract: If assets write-downs are tax-deductible from the corporate income tax base, companies could discretionally use them to reduce their tax burden. This paper aims at investigating whether and to what extent taxes affect the firmÕs discretionary choice to write-down long term equity investments. The analysis is based on panel data for Italian companies. In the period 1998Ð2006 the Italian corporate income tax was reformed several times. In particular, the tax deductibility of write-downs of equity investment was repealed in 2004. The paper exploits the ensuing high cross-sectional and timeseries variation in the marginal tax rate (measured before the decision to write-down equity investments) in order to identify tax effects. The econometric analysis delivers strong evidence that taxes affect the decision to write-down. The paper also provides evidence of an interaction between tax minimization, financial reporting costs and agency costs.
    Keywords: corporate taxation, asset impairments, write-downs of equity investments, tax planning, financial reporting, agency relationship
    JEL: H25 H32 K34 M41
    Date: 2013–12
  18. By: Ana Dinis; Cidália Lopes (Instituto Superior de Contabilidade e Administração de Coi); Alexandre Silva
    Abstract: This article aims to analyze the taxation of insolvent companies and how this process can lead to more tax evasion and tax fraud, in Portugal. Thus, this paper intends to explore how the complexity of the tax system allows tax evasion and tax fraud in insolvency proceedings. This paper is divided in two parts. At first, a review of major studies in national and international context, analyze and debate the issues raised by taxation of insolvent companies from the perspective of tax evasion and fraud. In this regard, the complexity of business insolvency, which becomes even more controversial when embracing the taxation of insolvent companies. Many of the problems that arise for the correct identification of the tax treatment applicable to processes happen to set between tax law and bankruptcy law. Second, we present the results of a study conducted in Portugal in 2013, which qualitatively assesses the perceptions of the Insolvency Administrators (AI), in relation to the taxation of insolvent companies. The technique used for gathering information was the use of questionnaires administered to the entire population of AI. A response rate of 15.48% was obtained. It was concluded that the Portuguese tax system do not make taxation of insolvent companies a clear process, raising many questions about the subject of insolvent companies to tax. Furthermore, the CIRE by giving primacy to the insolvency, for the sake of business recovery, leads to the possibility of tax evasion and fraud. To sum up, it is deemed indispensable the harmonization of procedures, legal and tax, the CIRE and the CIRC in order to a more consistent treatment of tax in insolvency proceedings, in order to annul the tax evasion and tax fraud case insolvency and also allow business recovery.
    Keywords: insolvent firms. Tax on Corporate Income Tax (IRC). Tax evasion and fraud; insolvent firms. Tax on Corporate Income Tax (IRC). Tax evasion and fraud.
    JEL: G33 K34
    Date: 2015–02
  19. By: Geoffrey R. Dunbar; Chunling Fu
    Abstract: We use data from the Survey of Financial Security and the Survey of Household Spending to estimate the incidence and extent of income under-reporting in Canada in 1998 and 2004. We estimate that the proportion of households under-reporting income is roughly 35 to 50 per cent in both years. Our estimates also suggest that the amount of under-reported income rose by roughly 40 per cent between 1998 and 2004 and remained stable as a proportion of GDP of 14 to 19 per cent. We find evidence that income underreporting is pervasive and is not confined to households that report self-employment income in the survey data. We also find that poverty measures that rely on reported income appear unreliable because under-reporting necessarily implies a lower reported income. Thus, households that under-report appear to be poorer. We propose a simple ratio method of identifying households that under-report income using the household’s budget share on shelter.
    Keywords: Domestic demand and components
    JEL: H26 I32 K42
    Date: 2015

This nep-law issue is ©2015 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.
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.