nep-law New Economics Papers
on Law and Economics
Issue of 2016‒08‒14
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Psychic Punishment Costs and Deterrence By Bakó, Barna; Isztin, Péter
  2. Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians By Eric Avis; Claudio Ferraz; Frederico Finan
  3. Global spread of pharmaceutical patent protections: micro evidence from the international equivalents of the drug patents in Japan By OKADA, Yoshimi; NAGAOKA, Sadao
  4. Court Efficiency and Procurement Performance By Coviello, Decio; Moretti, Luigi; Spagnolo, Giancarlo; Valbonesi, Paola
  5. Development and Land Acquisition in the View of Law and Economics By Dinda, Soumyananda
  6. Racism and judicial corruption in the US By Michael Jetter; Alejandro Mesa Osorio
  7. A Spatial Analysis to Permanent Income as Deterrent of Homicides: the case of Medellin City By Joaquin A. Urrego; Catalina Gómez Toro; Hermilson Velásquez
  8. Does “Ban the Box” Help or Hurt Low-Skilled Workers? Statistical Discrimination and Employment Outcomes When Criminal Histories are Hidden By Jennifer L. Doleac; Benjamin Hansen
  9. Salience Theory of Judicial Decisions By Bordalo, Pedro; Gennaioli, Nicola; Shleifer, Andrei
  10. Temporary Jobs and the Severity of Workplace Accidents By Picchio, Matteo; van Ours, Jan C.
  11. "Economic growth and the reform of the judicial system of Bulgaria in the period 2000-2015 (vision for a new measurement model)" By Nozharov, Shteryo

  1. By: Bakó, Barna; Isztin, Péter
    Abstract: In this paper we analyze criminal deterrence in the presence of specific psychic costs of punishments. We consider a dynamic model with three players, analyzing the choices of a representative lawmaker, potential criminal and judge. In our setting the lawmaker decides whether to introduce a fixed punishment enhancement above a chosen threshold of crime level, depending on its popularity among the voters. In reaction, the judge, who is influenced by her own preferences as well as the opinion of her peer group, might change the probability of punishment, through affecting the standard of reasonable doubt. Our results suggest that large discontinuous and mandatory increases in punishment can have unintended effects that are contrary to the stated goal of such punishment enhancements. In equilibrium, when either the judge or her peer group is "anti-punishment" enough, the level of criminal activity might increase in response to the punishment enhancement. This perverse effect is less likely to occur if there is a higher number of peer groups within the "elite", so that a greater extent of self-selection by judges can occur. Our results have relevance for a number of areas outside the traditional criminal justice system as well, such as special courts (such as ecclesiastical or military courts), or the strictness and enforcement of regulations.
    Keywords: crime, deterrence, punishment, peer effects
    JEL: D81 K12 K42
    Date: 2016–08–01
  2. By: Eric Avis; Claudio Ferraz; Frederico Finan
    Abstract: Political corruption is considered a major impediment to economic development, and yet it remains pervasive throughout the world. This paper examines the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability. We do so in the context of Brazil’s anti-corruption program, which randomly audits municipalities for their use of federal funds. We find that being audited in the past reduces future corruption by 8 percent, while also increasing the likelihood of experiencing a subsequent legal action by 20 percent. We interpret these reduced-form findings through a political agency model, which we structurally estimate. Based on our estimated model, the reduction in corruption comes mostly from the audits increasing the perceived threat of the non-electoral costs of engaging in corruption.
    JEL: H41 H77 H83 K42 O1 O38 O43 O54
    Date: 2016–07
  3. By: OKADA, Yoshimi; NAGAOKA, Sadao
    Abstract: We investigate the global spread of pharmaceutical patent protections as acquired by firms, based on a novel global patent database for all significant medical drugs introduced in Japan. It gives us the propensity of filing and grant rate for each country for the granted patents in Japan. Major findings are the following. Both the filing propensity to and the grant rate of major Asian countries approached those of the OECD economies by the early 2000s for chemical substance inventions. However, there still exists substantial heterogeneity with respect to the other drug inventions: crystal, use, formulation or combination, suggesting a significant future room for international harmonization of patent granting standard. We found clear evidence for policy impact on the spread of protections for the two largest non-OECD economies. The Patent Law reform in China in 1993 had an immediate and significant impact on patent filing propensity to China (25 percentage points increase) well before it becoming a WTO member in late 2001. Furthermore, the mailbox application system in India had a substantial effect: the filing propensity reached 80 percent of the number of corresponding EP patent applications around year 2000, well before the year of TRIPS implementation for drug patents.
    Keywords: pharmaceutical patent, chemical substance patent, TRIPS Agreement, India, China, propensity of patent filing, grant rate
    JEL: O34 O38 K29
    Date: 2016–07
  4. By: Coviello, Decio; Moretti, Luigi; Spagnolo, Giancarlo; Valbonesi, Paola
    Abstract: Disputes over penalties for breaching a contract are often resolved in court. A simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in order to avoid litigation, therefore inducing sellers to delay contract delivery. By using a large dataset on Italian public procurement, we empirically study the effects of court inefficiency on public work performance. We find that where courts are inefficient: i) public works are delivered with longer delays; ii) delays increase for more valuable contracts; iii) contracts are more often awarded to larger suppliers; and iv) a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.
    Keywords: Court efficiency; public procurement; time incentives; performance in contract execution; delay; litigation; enforcement cost.
    JEL: H41 H57 K41
    Date: 2016–08
  5. By: Dinda, Soumyananda
    Abstract: The marginal productivity theory determines the value of a land under ceteris peribus. Land price depends on economic opportunity, time and technology. Recently, development policy focuses on creation of economic opportunity that increases the demand for transferring land from primary to secondary or tertiary activities. Market mechanism is sufficient argument of distributive justice for land acquisition for development activity, but some time it fails. Landowners are heterogeneous in terms of knowledge, skill, risk preferences, attitudes, perception of future development benefits, etc. Incorporating the mind set of landowners, how do we assign the value of land and compensate for land transfer for developmental activities? This paper focuses on it with possible alternative viable solutions. There is good reason to insist on compensation of displaced landowners at market prices for distributive justice with economic efficiency. Given the heterogeneity in land valuations, the required compensation rates can be set at the market rate. But the role of income security is ignored in market mechanism. The role of complementarities of land with farming skills those are non-transferable that incorporate their concern for financial security, time preference, and pattern of skills. These concerns exhibited considerable diversity with a corresponding diversity of preferences over alternative forms of non-cash compensation. Hence a menu of alternative compensation packages ought to be offered, to cater to this diversity.
    Keywords: Land Acquisition, Economic Development, Displacement, Economic efficiency, Distributive Justice, Domain Law, Compensation Policy, Income Security, Risk Preference, Valuation, Market price
    JEL: K1 K22 O1 O4 Q21 Q24
    Date: 2015–07–15
  6. By: Michael Jetter; Alejandro Mesa Osorio
    Abstract: Is racial hate reflected in the degree of judicial corruption? Using US state-level data, we find racial hate to be a positive and statistically powerful predictor of judicial corruption. This relationship prevails after the inclusion of the conventional control variables and regional fixed effects. In terms of magnitude, one standard deviation increase of racial hate relates to an increase of 70 percent of one standard deviation in corruption. Interestingly, no such relationship can be found for corruption in the executive or legislative branch.
    Keywords: corruption, racism
    JEL: D63 D73 H73 J15 J78
    Date: 2016–02–02
  7. By: Joaquin A. Urrego; Catalina Gómez Toro; Hermilson Velásquez
    Abstract: This paper studies the relationship between permanent income and homicides, estimating an income-crime elasticity. We assume that this elasticity varies across geographical areas. We estimate different specifications of Spatial Panel Models using information of urban areas in Medellin (Colombia), areas known as communes. Spatial Models consider the importance of location and the type of neighbors of each commune. We simulate an intervention over permanent income in order to estimate the income elasticity for each commune and the average elasticity of income-crime on the city. We provide evidence about spatial dependence between the homicides per commune and their neighbors, and about a relationship between homicides and neighbor’s income. In our case of study, the average estimated impact of 1% increase in permanent income in a specific commune produces a decrease in the homicide rate on average in 0.39%. Finally, permanent income plays a crime deterrent role, but also this effect of income on crime varies across the city, showing that some areas are strategically located to this kind of intervention.
    Keywords: Permanent income, Homicides, Spatial panel, Elasticity
    JEL: K4 C23 R12 R23
    Date: 2016–05–04
  8. By: Jennifer L. Doleac; Benjamin Hansen
    Abstract: Jurisdictions across the United States have adopted "ban the box" (BTB) policies preventing employers from conducting criminal background checks until late in the job application process. Their goal is to improve employment outcomes for those with criminal records, with a secondary goal of reducing racial disparities in employment. However, removing information about job applicants' criminal histories could lead employers who don't want to hire ex-offenders to try to guess who the ex-offenders are, and avoid interviewing them. In particular, employers might avoid interviewing young, low-skilled, black and Hispanic men when criminal records are not observable. This would worsen employment outcomes for these already-disadvantaged groups. In this paper, we use variation in the details and timing of state and local BTB policies to test BTB's effects on employment for various demographic groups. We find that BTB policies decrease the probability of being employed by 3.4 percentage points (5.1%) for young, low-skilled black men, and by 2.3 percentage points (2.9%) for young, low-skilled Hispanic men. These findings support the hypothesis that when an applicant's criminal history is unavailable, employers statistically discriminate against demographic groups that are likely to have a criminal record.
    JEL: J15 J7 J78 K42
    Date: 2016–07
  9. By: Bordalo, Pedro; Gennaioli, Nicola; Shleifer, Andrei
    Abstract: We present a model of judicial decision making in which the judge overweights the salient facts of the case. The context of the judicial decision, which is comparative by nature, shapes which aspects of the case stand out and draw the judge’s attention. By focusing judicial attention on such salient aspects of the case, legally irrelevant information can affect judicial decisions. Our model accounts for a range of recent experimental evidence that bears on the psychology of judicial decisions, including anchoring effects in the setting of damages, decoy effects in choice of legal remedies, and framing effects in the decision to litigate. The model also offers a new approach to positive analysis of damage awards in torts.
    Date: 2015
  10. By: Picchio, Matteo; van Ours, Jan C.
    Abstract: From the point of view of workplace safety, it is important to know whether having a temporary job has an effect on the severity of workplace accidents. Using Italian data, we present an empirical analysis on the severity of workplace accidents by type of contract. We find that workers with a temporary contract, if subject to a workplace accident, were more likely to be confronted with severe injuries than permanent workers.
    Date: 2016–08
  11. By: Nozharov, Shteryo
    Abstract: The publication proposes a concept for new model for evaluation of the “reform of the judicial system”, different from those applied by the World Bank and the International Monetary Fund where the economic growth rate of each country is measured. Their models, based on performance indicators, examine the “reform of the judicial system” as constant and floating in time, evaluated in certain periods of time. This fact obstructs the identification of the relative legislative miscarriages of every single judicial reform. The new model, proposed by the current study, discusses the possibilities how the presence of a single reform of the judicial system could be identified by a group of indicators. In this way it can be determined both the effectiveness of the reform of the judicial system and the government will for reform during its mandate. The model is especially useful to be implemented by countries with transitional economies when evaluating the correlation between the reform of the judicial system and the economic growth. As an example, in the current study the model is applied to the judicial system of Bulgaria.
    Keywords: reform of the judicial system, economic growth, econometric analysis;
    JEL: K10 O11 O52
    Date: 2015–11–06

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