nep-law New Economics Papers
on Law and Economics
Issue of 2016‒09‒25
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Substance Abuse Treatment Centers and Local Crime By Bondurant, Samuel R.; Lindo, Jason M.; Swensen, Isaac D.
  2. Invalid but infringed? An analysis of the bifurcated patent litigation system By Cremers, K.J.; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; Lefouili, Yassine
  3. Incarceration, Recidivism and Employment By Manudeep Bhuller; Gordon B. Dahl; Katrine V. Løken; Magne Mogstad
  4. Immigrant Crime and Legal Status: Evidence from Repeated Amnesty Programs By Francesco Fasani
  5. Reverse payments and generic entry competition By WAN, Jiangyun(Yunyun)
  6. Vertical Restraints in B2B Contracts: The Impact of Competition and Competitiveness By Avdasheva, Svetlana
  7. The third worker: Assessing the trade-off between employees and contractors By Pedro S. Martins
  8. The Impact of Legislation on the Hazard of Female Genital Mutilation/Cutting: Regression Discontinuity Evidence from Burkina Faso - Working Paper 432 By Ben Crisman, Sarah Dykstra, Charles Kenny and Megan O'Donnell
  9. The Analysis of Prison-Prisoner Data Using Cluster-Sample Econometrics: Prison Conditions and Prisoners' Assessments of the Future By Entorf, Horst; Sattarova, Liliya
  10. Insiders, Outsiders, and Involuntary Unemployment: Sexual Harrassment Exacerbates Gender Inequality By Chen, Daniel L.; Sethi, Jasmin
  11. Electronic monitoring and recidivism. Quasi-experimental evidence from Norway By Synøve N. Andersen; Kjetil Telle
  12. Enforcement of Labor Market Regulations: Heterogeneous Compliance and Adjustment across Gender By Mariana Viollaz
  13. Measuring Judicial Ideology Using Law Clerk Hiring By Bonica, Adam; Chilton, Adam S.; Goldin, Jacob; Rozema, Kyle; Sen, Maya
  14. Ideological Perfectionism By Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
  15. L’Histoire se répète. Why the liberalization of the EU vineyard planting rights regime may require another French Revolution (And why the US and French Constitutions may have looked very different without weak planting rights enforcement) By Giulia Meloni; Johan Swinnen

  1. By: Bondurant, Samuel R. (Texas A&M University); Lindo, Jason M. (Texas A&M University); Swensen, Isaac D. (Montana State University)
    Abstract: In this paper we estimate the effects of expanding access to substance-abuse treatment on local crime. We do so using an identification strategy that leverages variation driven by substance-abuse-treatment facility openings and closings measured at the county level. The results indicate that substance-abuse-treatment facilities reduce both violent and financially motivated crimes in an area, and that the effects are particularly pronounced for relatively serious crimes. The effects on homicides are documented across three sources of homicide data.
    Keywords: substance abuse treatment, crime, homicides
    JEL: I12 K14 K42
    Date: 2016–09
  2. By: Cremers, K.J.; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; Lefouili, Yassine
    Abstract: In bifurcated patent litigation systems, claims of infringement and validity of a patent are decided independently of each other in separate court proceedings at different courts. In non-bifurcated systems, infringement and validity are decided jointly in the same proceedings at a single court. We build a model that shows the key trade-off between bifurcated and non-bifurcated systems and how it affects the incentives of plaintiffs and defendants in patent infringement cases. Using detailed data on patent litigation cases in Germany (bifurcated) and the U.K. (non-bifurcated), we show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. We also show that having to challenge a patent’s validity in separate court proceedings under bifurcation implies that alleged infringers are less likely to do so. We find this to apply in particular to more resource-constrained alleged infringers. Finally, we find parties to be more likely to settle in a bifurcated system.
    Keywords: Litigation, patents, bifurcation
    Date: 2016–09
  3. By: Manudeep Bhuller; Gordon B. Dahl; Katrine V. Løken; Magne Mogstad
    Abstract: Understanding whether, and in what situations, time spent in prison is criminogenic or preventive has proven challenging due to data availability and correlated unobservables. This paper overcomes these challenges in the context of Norway’s criminal justice system, offering new insights into how incarceration affects subsequent crime and employment. We construct a panel dataset containing the criminal behavior and labor market outcomes of the entire population, and exploit the random assignment of criminal cases to judges who differ systematically in their stringency in sentencing defendants to prison. Using judge stringency as an instrumental variable, we find that imprisonment discourages further criminal behavior, and that the reduction extends beyond incapacitation. Incarceration decreases the probability an individual will reoffend within 5 years by 27 percentage points, and reduces the number of offenses over this same period by 10 criminal charges. In comparison, OLS shows positive associations between incarceration and subsequent criminal behavior. This sharp contrast suggests the high rates of recidivism among ex-convicts is due to selection, and not a consequence of the experience of being in prison. Exploring factors that may explain the preventive effect of incarceration, we find the decline in crime is driven by individuals who were not working prior to incarceration. Among these individuals, imprisonment increases participation in programs directed at improving employability and reducing recidivism, and ultimately, raises employment and earnings while discouraging further criminal behavior. Contrary to the widely embraced 'nothing works' doctrine, these findings demonstrate that time spent in prison with a focus on rehabilitation can indeed be preventive.
    JEL: J24 K42
    Date: 2016–09
  4. By: Francesco Fasani (Queen Mary University of London)
    Abstract: Do general amnesty programs lead to reductions in the crime rate among immigrants? We answer this question by exploiting both cross-sectional and time variation in the number of immigrants legalized generated by the enactment of repeated amnesty programs between 1990 and 2005 in Italy. We address the potential endogeneity of the "legalization treatment" by instrumenting the actual number of legalized immigrants with alternative predicted measures based on past amnesty applications patterns and residential choices of documented and undocumented immigrants. We find that, in the year following an amnesty, regions in which a higher share of immigrants obtained legal status experienced a greater decline in non-EU immigrant crime rates, relative to other regions. The effect is statistically significant but relatively small and not persistent. In further results, we fail to find any evidence of substitution in the criminal market from other population groups - namely, EU immigrants and Italian citizens - and we observe small and not persistent reduction in total offenses.
    Keywords: illegal migration, legalization, migration policy
    JEL: F22 J61 K37
    Date: 2016–09
  5. By: WAN, Jiangyun(Yunyun)
    Abstract: In the United States, brand-name drug manufacturers often pay generic companies to delay marketing of their generic products. In this paper we develop an analytical framework to examine the implications of banning reverse payment settlements. We first find that reverse payment settlements occur when generic firms face relatively high entry cost but do not when entry costs are sufficiently low. We next show cases in which reverse payment settlements are harmful to brands. We also consider the counterfactual case when 180-day marketing exclusivity rights are removed from Hatch-Waxman and find that the absence of marketing exclusivity rights encourages brands to proceed with reverse payment settlements.
    Keywords: reverse payment settlements, generic entry competition, Hatch-Waxman, marketing exclusivity
    JEL: I18 K23 L13
    Date: 2016–08
  6. By: Avdasheva, Svetlana (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The result of arduous development of the theory of vertical restraints has become seemingly trivial conclusion that their use may or may restrict competition, and encourage her. The main difference between the conditions of competition-restricting conditions vertical agreements from the horizontal - they ban could have a dramatically negative impact on competitiveness. That's why in the center of the global practice of antitrust prohibitions against vertical restraints is generally balanced approach. European competition law - as well as Russia - criticized for being too wide a range of prohibitions on the letter of the law (per se). However, the central problem of the use of bans in Russia is used as a sign of self-violation of the law infringement of interests of participants of the contractual relationship.
    Keywords: vertical restraints, antitrust, balanced approach, international comparisons
    Date: 2016–05–30
  7. By: Pedro S. Martins
    Abstract: Firms make labour demand decisions not only between permanent and non-permanent employees but also increasingly more between employees and contractors. Indeed, this third work format can be attractive, also when employment protection law is restrictive. This paper examines empirically this scarcely researched trade-off drawing on a recent reform in Portugal that cut the severance pay of new employee hires while leaving unchanged the regulations affecting contractors. Our analysis draws on difference-in-differences methods and original high-frequency firm-level panel data on both employees and contractors. We find that the reduction in severance pay had a large relative positive effect on the wage bills and worker counts of employees compared to contractors. This result, robust to a number of checks, highlights the role of labour regulations as an additional driver of more flexible labour formats.
    Keywords: Employment law, segmentation, duality, future of work
    JEL: J23 J41 J63
    Date: 2016–09
  8. By: Ben Crisman, Sarah Dykstra, Charles Kenny and Megan O'Donnell
    Abstract: In 1996, Burkina Faso enacted legislation banning the practice of female genital mutilation/cutting (FGM/C). Much of the qualitative literature surrounding FGM/C discounts the impact of legal change on what is considered a social/cultural issue. We use data from the Demographic and Health Surveys DHS(VI) in Burkina Faso to test for a discontinuous change in the likelihood of being cut in the year the law was passed. We find robust evidence for a substantial drop in hazard rates in 1996 and investigate the heterogeneous impact of the law by region, religion, and ethnicity. Overall, we roughly estimate that over a ten year period the law averted the genital mutilation/cutting of approximately 237,591 women and girls. We qualify our findings recognizing that Burkina Faso is a special case with a long history of bottom-up and top-down approaches to eliminating the practice.
    Keywords: FGM/C, social norms, legal change, regression discontinuity
    JEL: A13 I18 J16 J18 K14
    Date: 2016–07
  9. By: Entorf, Horst (Goethe University Frankfurt); Sattarova, Liliya (Goethe University Frankfurt)
    Abstract: The study investigates whether and how strong prison conditions contribute to the perceived propensity to recidivate after controlling for personal characteristics and criminal background. In order to combine different sources of information on personal characteristics of prison inmates and administrative prison data in an efficient way, we propose the use of matched prison-prisoner data and application of cluster-sample methods such as GEE (generalized estimating equations). Estimated average partial effects based on GEE and random-effects Probit modeling reveal that prison conditions show significant effects on the perceived likelihood of future reincarceration. Particularly, we find that inmates facing prison overcrowding show a reduced likelihood of recidivism.
    Keywords: matched prison-prisoner data, perceived specific deterrence, recidivism, GEE
    JEL: K40 C34 C52
    Date: 2016–09
  10. By: Chen, Daniel L.; Sethi, Jasmin
    Abstract: Sexual harassment is perceived to be a major impediment to female labor force participation. We use the random assignment of U.S. federal judges setting geographically-local precedent, and the fact that judges’ biographies predict decisions in sexual harassment cases, to document the causal impact of forbidding sexual harassment. Consistent with an insider-outsider theory of involuntary unemployment, but in contrast to a mandated benefits theory of employment protections, pro-plaintiff sexual harassment precedent spurred the adoption of sexual harassment human resources policies, encouraged entry of outsiders, and reduced gender inequality in labor supply and wages among the population. These effects were comparable to the effects of the Equal Employment Opportunity Act and greatest in the construction industry, which was heavily affected by sexual harassment litigation.
    Keywords: Gender discrimination, microaggression, trauma, safe spaces, prejudice
    JEL: J31 J71 J81 J83 K31
    Date: 2016–08
  11. By: Synøve N. Andersen; Kjetil Telle (Statistics Norway)
    Abstract: The replacement of custodial with non-custodial sanctions holds the potential to reduce recidivism as well as other costs associated with imprisonment. However, the causal impacts on recidivism of noncustodial sanctions in general, and electronic monitoring (EM) programs in particular, remain unclear. We estimate the effect of EM on recidivism by exploiting an EM program that was gradually introduced in Norwegian counties from 2008, using difference-in-differences and instrumental variable designs. Results show that introducing EM reduced 2-year recidivism rates by about 10 percent, which corresponds to about 19 percent for those actually serving on EM. We find no effects on recidivism intensity or severity. Subsample analyses show that the effect estimates are strongest among offenders without previous imprisonment or recent unemployment spells, and although between-groups differences are statistically non-significant, this suggest that avoiding prison stigma and maintaining workplace relations can be important to reduce recidivism and promote desistance. The reliability of our results is somewhat challenged by unstable pre-implementation trends and signs that more people are convicted to EM-qualifying sentences when EM is introduced.
    Keywords: Electronic monitoring; non-custodial sanctions; recidivism; difference-in-differences; instrumental variable
    JEL: K49 J19
    Date: 2016–08
  12. By: Mariana Viollaz (CEDLAS - UNLP)
    Abstract: When compliance with labor market regulations is low, the enforcement of the labor law becomes a concept that is closer to the regulatory environment that firms and workers face. Firms are expected to react to variations in the enforcement level, and the response may differ for male and female workers. This paper explores microdata from Argentine household surveys to analyze: (i) how changes in the enforcement of labor regulations affect the level of compliance with the labor law among men and women, and (ii) how changes in the enforcement of the labor law generate adjustments of other labor outcomes, for men and women separately. Using information of the highly decentralized labor inspection system in Argentina, I construct an enforcement measure with variation at the province, sector, and time level (share of inspected firms). To deal with the potential endogeneity of this measure, I instrument using a measure of the arrival cost of labor inspectors to the firms. The main findings reveal different patterns of adjustment for men and women. When the degree of enforcement increases: the compliance with employment and social security regulations increases for men and decreases for women; the share of wage employees increases and the share of self-employed declines for men, with no changes for women; no changes are found in hourly wages and in the provision of non-mandated benefits. These results bring additional evidence about how the regulatory environment can impact on the decisions of firms and workers about participating in the informal sector. More importantly, they stress that both the written labor regulation and the degree of enforcement are essential parts in the provision of social and labor protection.
    Date: 2016–06
  13. By: Bonica, Adam (Stanford University); Chilton, Adam S. (University of Chicago); Goldin, Jacob (Stanford University); Rozema, Kyle (Northwestern University); Sen, Maya (Harvard University)
    Abstract: We present a new measure of judicial ideology based on judicial hiring behavior. Specifically, we utilize the ideology of the law clerks hired by federal judges to estimate the ideology of the judges themselves. These Clerk-Based Ideology (CBI) scores complement existing measures of judicial ideology in several ways. First, CBI scores can be estimated for judges across the federal judicial hierarchy. Second, CBI scores can capture temporal changes in ideology. Third, CBI scores avoid case selection and strategic behavior concerns that plague existing vote-based measures. We illustrate the promise of CBI scores through a number of applications.
    JEL: M51
    Date: 2016–07
  14. By: Chen, Daniel L.; Michaeli, Moti; Spiro, Daniel
    Abstract: Studying a high-stakes field setting, we examine which individuals, on an ideological scale, conform more to the opinion of others. In the U.S. Courts of Appeals, legal precedents are set by ideologically diverse and randomly composed panels of judges. Using exogenous predictors of ideology and rich voting data we show that ideological disagreements drive dissents against the panel’s decision, but ideologically extreme judges are caving in: they are the least likely to dissent and their voting records are the least correlated with their predicted ideology. Meanwhile, moderately ideological judges are dissenting the most despite evidence that they are more often determining the opinion. Our theoretical analysis shows that these findings are most consistent with a model of decision making in the presence of peer pressure with a concave cost of deviating from one’s ideological convictions – perfectionism. This result presents a critique of a standard assumption in economics – that the cost of deviating from one’s bliss point is convex – with fundamental implications for decision making in social and political settings and for the empirical predictions of theoretical models in these domains.
    Keywords: Judicial decision making, group decision making, ideology, peer pressure.
    JEL: D7 K00 Z1
    Date: 2016–09
  15. By: Giulia Meloni; Johan Swinnen
    Abstract: In 2008, the EU voted to liberalize its system of planting rights which has strictly regulated vine plantings in the EU. However, after an intense lobbying campaign the liberalization of the planting right system was overturned in 2013 and new regulations created an even more restrictive system. European wine associations complained about the detrimental effects of the new regulations. There is a precedent in history. In 1726, the French political philosopher and landowner Montesquieu complained to the French King about the prohibition on planting new vines. Montesquieu was not successful in his demands to remove the planting rights. Old and recent history suggests that political forces against liberalization of planting rights are very strong. Only the French Revolution in 1789 led to a fundamental liberalization of planting rights. The “liberal period” of the 19th century was sustained by the combination of the French Revolution’s liberal ideology, the thirst for wine of Napoleon’s armies and diseases that wiped out most of the French vineyards. That said, in the past and the present, enforcement of planting rights is a major problem. In fact, despite the official restrictions, Montesquieu managed to plant his vines, allowing him to become a successful wine producer and merchant and to travel and to spend time thinking, discussing and ultimately writing up his ideas which influenced much of the Western world’s constitutions.
    Date: 2015

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