nep-law New Economics Papers
on Law and Economics
Issue of 2016‒07‒09
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Expert opinion in a tort litigation game By Yves Oytana; Nathalie Chappey
  2. A crime 2.0 - cybercrime, e-talent, and institutions By Seo-Young Cho
  3. Precision-Guided or Blunt? The Effects of US Economic Sanctions on Human Rights By Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
  4. Effects of the Minimum Wage on Infant Health By George Wehby; Dhaval Dave; Robert Kaestner
  5. The Price We Pay: Economic Costs of Barriers to Employment for Former Prisoners and People Convicted of Felonies By Cherrie Bucknor; Alan Barber
  6. Regulatory Networks, Legal Federalism, and Multi-level Regulatory Systems By Wolfgang Kerber; Julia Wendel
  7. Evolution of the insolvency framework for non-financial firms in India By Rajeswari Sengupta; Anjali Sharma; Susan Thomas
  8. The Microeconomics of Corruption. A Review of Thirty Years of Research By Roberto Burguet; Juan-José Ganuza; José García-Montalvo
  9. When do Firms Go Green? Comparing Price Incentives with Command and Control Regulations in India By Nataraj, Shanthi; Harrison, Ann E.; Martin, Leslie A.; Hyman, Ben
  10. The Impact of the Implementation of Council Directives on Labour Migration Flows from Third Countries to EU Countries By Tommaso Colussi

  1. By: Yves Oytana; Nathalie Chappey
    Abstract: We investigate the potential impact of various proposed reforms intended to improve the quality of expert testimony while reducing its cost, and to facilitate the work of judges in appointing experts and reading their reports. To do so, we present a unilateral care model under strict liability in which the court cannot perfectly observe the amount of harm a tortfeasor has caused to a victim. However, the judge may appoint an expert to improve his chance of reaching a correct decision. In this context, we find that the likelihood of a victim filing a lawsuit decreases with the quality of the expert testimony and with the cost of the expertise procedure, and increases with the non-monetary cost for the judge to appoint an expert. Moreover, we find that the effects of these parameters on the injurer's level of precaution are ambiguous. We also find that the injurer's level of care is suboptimal. Finally, we make some public policy recommendations in order to (i) increase the injurer's level of care and (ii) reduce the expected cost of a trial in the event of an accident. We find that the policy maker faces a trade-off between these two objectives.
    Keywords: Litigation, Expert, Expert testimony, Liability.
    JEL: K40 K41 K49
    Date: 2016
  2. By: Seo-Young Cho (University of Marburg)
    Abstract: Cybercrime is typically profiled as a skill-intensive crime committed by educated, young criminals. This observation raises the controversial question of whether advanced knowledge and skills are a pull factor of cybercrime. In this paper, the linkage between e-skills and cybercrime is investigated using statistics from up to 28 European countries. Through the investigation, it is shown that electronic skills induce more cybercrime under weak institutions where the rules of law do not provide protection and incentives for productive entrepreneurial activities. This compound effect between e-skills and institutions suggests that institutional factors are crucial to allocating human capital between productive and criminal activities in cyberspace.
    Keywords: cybercrime, e-skills, institutions, entrepreneurship
    JEL: E24 K42 O15
    Date: 2016
  3. By: Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
    Abstract: We use endogenous treatment-regression models to estimate the causal average treatment effect of US economic sanctions on four types of human rights. In contrast to previous studies, we find no support for adverse effects of sanctions on economic rights, political and civil rights, and basic human rights. With respect to women’s rights, our findings even indicate a positive relationship. Emancipatory rights are, on average, strengthened when a country faces sanctions by the US. Our findings are robust when applying various changes to the empirical specification. Most importantly, this study provides strong evidence that the endogeneity of treatment assignment must be modelled when the consequences of sanctions are studied empirically.
    Keywords: Democratization, Discrimination, Economic Sanctions, Endogenous Treatment Model, Human Rights, Interventionism, Protectionism, Repression, United States
    JEL: F51 F52 F53 K10 K11 P14 P16 P26
    Date: 2016
  4. By: George Wehby; Dhaval Dave; Robert Kaestner
    Abstract: The minimum wage has increased in multiple states over the past three decades. Research has focused on effects on labor supply, but very little is known about how the minimum wage affects health, including children’s health. We address this knowledge gap and provide an investigation focused on examining the impact of the effective state minimum wage rate on infant health. Using data on the entire universe of births in the US over 25 years, we find that an increase in the minimum wage is associated with an increase in birth weight driven by increased gestational length and fetal growth rate. The effect size is meaningful and plausible. We also find evidence of an increase in prenatal care use and a decline in smoking during pregnancy, which are some channels through which minimum wage can affect infant health.
    JEL: I1 I3 J2 J3
    Date: 2016–06
  5. By: Cherrie Bucknor; Alan Barber
    Abstract: Despite modest declines in recent years, the large and decades-long blossoming of the prison population ensure that it will take many years before the United States sees a corresponding decrease in the number of former prisoners. Using data from the Bureau of Justice Statistics (BJS), this report estimates that there were between 14 and 15.8 million working-age people with felony convictions in 2014 of whom between 6.1 and 6.9 million were former prisoners.
    JEL: E H K K4 K42 J J1 J2 J7
    Date: 2016–06
  6. By: Wolfgang Kerber (University of Marburg); Julia Wendel (University of Marburg)
    Abstract: Transnational regulatory networks play important roles in multi-level regulatory regimes, as e.g, the European Union. In this paper we analyze the role of regulatory networks from the perspective of the economic theory of legal federalism. Often sophisticated intermediate institutional solutions between pure centralisation and pure decentralisation can help to solve complex tradeoff problems between the benefits and problems of centralised and decentralised solutions. Drawing upon the insights of the political science literature about regulatory networks, we show that regulatory networks might be an institutional innovation that can fulfill a number of functions (rule-making, best practices and policylearning, effective enforcement, conflict resolution) that might allow for a better intermediate solution between centralised and decentralised regulatory powers. We apply our approach in three case studies to very different regulatory networks, the Body of European Regulators for Electronic Communication (BEREC), the European Competition Network (ECN), and the International Competition Network (ICN). An important result is that regulatory networks might not only be a temporary phenomenon but part of long-term institutional solutions in European multi-level regulatory regimes.
    Keywords: Regulatory networks, multi-level regulatory systems, legal federalism, EU regulation
    JEL: K2 F55 H11 H77
    Date: 2016
  7. By: Rajeswari Sengupta (Indira Gandhi Institute of Development Research); Anjali Sharma (Indira Gandhi Institute of Development Research); Susan Thomas (Indira Gandhi Institute of Development Research)
    Abstract: The current Indian framework for corporate insolvency resolution, is fraught with deficiencies in the laws, their procedures, their implementation as well as in the capacity of the institutions supporting them. The absence of a coherent and effective mechanism for resolving corporate insolvency has resulted in poor economic outcomes. The origin of the complex framework characterised by multiple, fragmented laws, can be traced back to the history of its evolution. In this paper, we describe the evolution of the corporate insolvency resolution framework, with the objective of linking it back to the policy directive of the time. We conclude that when policy adopts a piecemeal approach focusing on solving only a part of the complex problem, one at a time, it most often leads to inefficient outcomes on the overall objective. We end with a brief description of the Insolvency and Bankruptcy Code (IBC), 2016 which is most recent policy initiative in this field. The IBC is a clean, modern law that offers a simple, coherent answer to the insolvency resolution problems under current Indian conditions. Once implemented, the law will potentially change not only the manner in which insolvency is resolved in India but also the entire credit landscape of the country.
    Keywords: Indian insolvency law, Restructuring, Winding up, Secured creditors, Debt recovery, Insolvency and Bankruptcy Code
    JEL: G33 G34 K2
    Date: 2016–06
  8. By: Roberto Burguet; Juan-José Ganuza; José García-Montalvo
    Abstract: We review microeconomic research on corruption from the last thirty years. We start by analyzing the seminal models of corruption built on three-tier, delegation models. Then, go into more details of the context of corrupt deals, and discuss the main economic factors that affect corruption. We discuss incentives and compensation in bureaucracies, and the interplay of market and bureaucratic structure. Competition and contract design will also be reviewed in relation to procurement under corruptible agents. After reviewing the theoretical contributions, we turn to the empirical evidence. We begin discussing measurement issues, and then move to the analysis of the empirical evidence relative to the theoretical models discussed in previous sections. Finally, we cover several anti-corruption mechanisms proposed in the literature and discuss their relative merits as devices to control or eliminate illegal activities.
    Keywords: corruption, bribes, deterrence, Bureaucracy, competition, game theory, Mechanism Design
    JEL: C73 D72 D73 K42
    Date: 2016–06
  9. By: Nataraj, Shanthi; Harrison, Ann E.; Martin, Leslie A.; Hyman, Ben
    Abstract: India has a multitude of environmental regulations but a history of poor enforcement. Between 1996 and 2004, India's Supreme Court required 17 cities to enact Action Plans to reduce air pollution through a variety of command-and-control (CAC) environmental regulations. We compare the impacts of these regulations with the impact of changes in coal prices on establishment-level pollution abatement, coal consumption, and productivity growth. We find that higher coal prices reduced coal use within establishments, with price elasticities similar to those found in the US. In addition, higher coal prices are associated with lower pollution emissions at the district level. CAC regulations did not affect within-establishment pollution control investment or coal use, but did impact the extensive margin, increasing the share of large establishments investing in pollution control and reducing the entry of new establishments. For reducing SO2 emissions, our results suggest that higher coal prices were more effective in improving environmental outcomes than command and control measures.
    Date: 2015–11
  10. By: Tommaso Colussi
    Abstract: This paper is part of the joint project between the Directorate General for Migration and Home Affairs of the European Commission and the OECD’s Directorate for Employment, Labour and Social Affairs on “Review of Labour Migration Policy in Europe”. This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. Grant: HOME/2013/EIFX/CA/002 / 30-CE-0615920/00-38 (DI130895) A previous version of this paper (DELSA/ELSA/MI(2015)4) was presented and discussed at the OECD Working Party on Migration in June 2015. The paper assesses the impact of three European Directives – Student Directive, Researcher Directive and the Blue Card Directive – on migration flows from third countries to the EU. Using a difference-in-difference empirical strategy and data from the EU-LFS and Eurostat database on work permits to non-EU workers, it estimates the effect of each Directive on the inflow of targeted third country nationals. Overall, the econometric analysis does not provide evidence of a direct impact of the implementation of either of the Directives on the inflow of targeted groups. Most member states did experience an increase in the inflow of non-EU high skilled workers after the adoption of the Blue Card Directive; however, this increase can be almost entirely explained by positive pre-existing trends in the inflow of this type of immigrants. Similarly, despite the increase in the number of permits issued to students and researchers from third countries in Europe, difference-in-differences estimates do not provide evidence of a direct effect of the implementation of the Student and Researcher Directive on changes in this type of inflows. The absence of a measurable impact of the three Directives analysed may be due to delayed effects of policy changes, which take time to filter into perception and thus affect immigrant inflows to Europe.
    JEL: F22 J61 K37 R23
    Date: 2016–06–24

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