nep-law New Economics Papers
on Law and Economics
Issue of 2016‒11‒06
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Cartel Dating By H. Peter Boswijk; Maurice J.G. Bun; Maarten Pieter Schinkel
  2. Clicking on Heaven's Door: The E ffect of Immigrant Legalization on Crime By Paolo Pinotti
  3. Effects of Parental Leave Policies on Female Career and Fertility Choices By Yamaguchi, Shintaro
  4. The Impact of Lengthening the School Day on Substance Abuse and Crime: Evidence from a German High School Reform By Franz Westermaier
  5. Does Crime Deter South Africans from Self-Employment? By Grabrucker, Katharina; Grimm, Michael
  6. Silence of the Innocents: Illegal Immigrants' Underreporting of Crime and their Victimization By Comino, Stefano; Mastrobuoni, Giovanni; Nicolò, Antonio
  7. Crime and Durable Goods By Sebastian Galiani; Laura Jaitman; Federico Weinschelbaum
  8. The Effect of New Jersey’s Paid Parental Leave Policy on Employment By Reed, Joshua; Vandegrift, Donald
  9. The Industrial Organization of Corruption: Monopoly, Competition and Collusion By Dmitry Ryvkin; Danila Serra
  10. Competitive Effects of Scope of Practice Restrictions: Public Health or Public Harm? By Sara Markowitz; E. Kathleen Adams; Mary Jane Lewitt, PhD,CNM; Anne Dunlop, MD
  11. The illicit beneficts of local party alignment in national elections By Oana Borcan
  12. Did the Government Intervention on the Firm’s Employment Policy Have an Effect on the Employment of Elderly Workers? By Nishimura, Yoshinori
  13. Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions By John Asker; Heski Bar-Isaac

  1. By: H. Peter Boswijk (University of Amsterdam, The Netherlands); Maurice J.G. Bun (University of Amsterdam, The Netherlands); Maarten Pieter Schinkel (University of Amsterdam, The Netherlands)
    Abstract: The begin and end dates of cartels are often ambiguous, despite competition authorities stating them with precision. The legally established infringement period(s), based on documentary evidence, need not coincide with the period(s) of actual cartel effects. In this paper, we show that misdating cartel effects leads to a (weak) overestimation of but-for prices and an underestimation of overcharges. Total overcharges based on comparing but-for prices to actual prices are a (weak) underestimation of the true amount overcharged, irrespective of the type and size of the misdating. The bias in antitrust damage estimation based on predicted cartel prices can have either sign. We extend the before-during-and-after method with an empirical cartel dating procedure that uses multiple structural break tests to determine the actual begin and end date(s) of the effects of collusive agreements. Empirical findings in the European Sodium Chlorate cartel corroborate our theoretical results.
    Keywords: Cartel; antitrust damages; dates; structural change; break test; but-for
    JEL: C22 C51 L41
    Date: 2016–11–01
  2. By: Paolo Pinotti (Bocconi University)
    Abstract: We estimate the e ect of immigrant legalization on the crime rate of immigrants in Italy by exploiting an ideal regression discontinuity design: fixed quotas of residence permits are available each year, applications must be submitted electronically on specific 'Click Days', and are processed on a first-come, first-served basis until the available quotas are exhausted. Matching data on applications with individual- level criminal records, we show that legalization reduces the crime rate of legalized immigrants by 0.6 percentage points on average, on a baseline crime rate of 1.1 percent.
    Keywords: legal status, crime, regression discontinuity design
    JEL: J61 K37 K42
    Date: 2016–10
  3. By: Yamaguchi, Shintaro
    Abstract: This paper constructs and estimates a dynamic discrete choice structural model of female employment and fertility decisions that incorporates job protection and cash benefits of parental leave legislation. The estimated structural model is used for ex ante evaluation of policy reforms that change the duration of job protection and/or the arrangement for cash benefits. Counterfactual simulations indicate that introducing an initial one-year job protection policy increases maternal employment significantly, but extending the existing job protection period from one to three years has little effect. The employment effects of cash benefits also seem modest. Overall, parental leave policies have little effect on fertility.
    Keywords: parental leave, female labor supply, discrete choice model, structural estimation
    JEL: J13 J22 J24
    Date: 2016–10
  4. By: Franz Westermaier
    Abstract: In the 2000s, a major educational reform in Germany reduced the academic high school duration by one year while keeping constant the total number of instructional hours before graduation. The instructional hours from the eliminated school year shifted to lower grade levels, which increased the time younger students spend at school. This study explores the impact of the reform on youth crime rates and substance abuse using administrative police crime statistics, administrative student enrollment data, and a student drug survey. The staggered implementation of the reform in different Länder-age-groups allows for a difference-in-difference approach. I find that the reform resulted in a decline in crime rates, which is almost exclusively driven by a reduction in violent crime and illegal substance abuse. Regarding the latter, the rate of illegal cannabis consumption strongly declined; however, no significant effect is detected on cannabis dealers or the consumption of other illegal drugs. The survey evidence further suggests that decreased cannabis consumption was not driven by a shift of consumption into `school hours'. The results point to an `incapacitation' effect of schooling due to the increased instructional hours at lower grade levels.
    Keywords: illegal substance abuse, school reform, difference-in-difference
    JEL: I12 I28
    Date: 2016
  5. By: Grabrucker, Katharina (University of Passau); Grimm, Michael (University of Passau)
    Abstract: An often-heard argument is that South Africa's very high crime rate is the main reason for the country's small share of business ownership. Combining a fixed-effects model with an instrumental variable approach, we estimate the effect of crime on self-employment and business performance using a matched data set of census, survey and police data. In contrast to previous studies, which focus on perceived rather than actual crime and often deal with geographically limited areas, we do not find robust evidence that high crime rates have a negative impact on self-employment. Although the impact of crime is statistically significant and negative, it is economically small. Moreover, our results suggest a positive rather than a negative relationship between robbery and burglary and sales and average business profits. These results suggest that crime may not be in general a serious threat for small businesses in low and middle-income countries.
    Keywords: crime, self-employment, microenterprises, South Africa, informal sector
    JEL: D22 J24 J46 K40 L26 O12
    Date: 2016–10
  6. By: Comino, Stefano (University of Udine); Mastrobuoni, Giovanni (University of Essex); Nicolò, Antonio (University of Padua)
    Abstract: We analyze the consequences of illegally residing in a country on the likelihood of reporting a crime to the police and, as a consequence, on the likelihood to become victims of a crime. We use an immigration amnesty to address two issues when dealing with the legal status of immigrants: it is both endogenous as well as mostly unobserved in surveys. Right after the 1986 US Immigration Reform and Control Act, which disproportionately legalized individuals of Hispanic origin, crime victims of Hispanic origin in cities with a large proportion of illegal Hispanics become considerably more likely to report a crime. Non-Hispanics show no changes. Difference-in-differences estimates that adjust for the misclassification of legal status imply that the reporting rate of undocumented immigrants is close to 11 percent. Gaining legal status the reporting rate triples, approaching the reporting rate of non-Hispanics. We also find some evidence that following the amnesty Hispanics living in metropolitan areas with a large share of illegal migrants experience a reduction in victimization. This is coherent with a simple behavioral model of crime that guides our empirical strategies, where amnesties increase the reporting rate of legalized immigrants, which, in turn, modify the victimization of natives and migrants.
    Keywords: immigration, amnesty, crime reporting, victimization survey
    JEL: J15 K37 K42 R23
    Date: 2016–10
  7. By: Sebastian Galiani; Laura Jaitman; Federico Weinschelbaum
    Abstract: Crime and the durability of goods are strongly connected issues. However, surprisingly, they have been studied separately. This paper explores the relationship between the production of durable goods and crime from a theoretical perspective and draws important conclusions for both topics. Crime affects the consumer and producer surplus and thus the behavior of consumers, firms, the market equilibrium, and, in turn, the social optimum. Lower durability of goods reduces the incentive to steal those goods, thus reducing crime. When crime is included in the standard framework of durable goods, even without considering the negative externalities of crime, perfect competition does not provide the optimal durability level. When considering different stealing technologies, perfect competition either over-produces durability or produces zero (minimum) durability. The monopolist under-produces durability regardless of the stealing technology considered. If crime externalities are taken into account, the socially optimal durability level is reduced and gets closer to that which prevails under monopoly. The model presented in this paper implies that the durability of goods, and the market structure for those goods, can be an effective instrument to reduce crime. In particular, making the durability of a good contingent upon that good being stolen is likely to increase welfare.
    JEL: K0 K00
    Date: 2016–10
  8. By: Reed, Joshua; Vandegrift, Donald
    Abstract: Paid parental leave policy remains a continuing source of controversy in the United States. Advocates for parental leave policy maintain that it has a positive effect on child rearing outcomes and family happiness. Critics, however, maintain that paid parental leave will cause firms to hire fewer women. This paper evaluates the critics’ claim that paid family leave entitlements will reduce employment using the New Jersey family leave law that took effect in 2009. We conduct a difference-in-difference analysis that compares county-level employment in western New Jersey using eastern Pennsylvania as a control. We disaggregate county-level employment to test whether women, workers of childbearing age, educated workers experienced larger employment effects in western New Jersey (relative to eastern Pennsylvania) following the New Jersey family leave law. We also conduct similar comparisons within New Jersey. Our estimates suggest that the New Jersey family leave law reduces overall employment by about 3.3 percent. However, the employment reductions among women, people of childbearing age, and more highly skilled workers are relatively larger. Finally, we find little evidence that family leave mandates have employment effects for unskilled workers.
    Keywords: paid family leave, paid maternity leave, difference-in-difference, employment
    JEL: J08 J23 J88 K31
    Date: 2016–10–28
  9. By: Dmitry Ryvkin (Department of Economics, Florida State University); Danila Serra (Department of Economics, Southern Methodist University)
    Abstract: We study how the introduction of competition between public officials for the provision of a given license affects extortionary corruption, i.e., the demands of harassment bribes. We conduct a laboratory experiment where citizens need to obtain licenses from public officials, and officials can demand a bribe on top of the license official fee. We first provide officials with monopoly power by giving citizens no choice but to pay the bribe to their assigned official. We then introduce competition among officials by allowing citizens to engage in costly search and get the license from any of the available offices. We examine transactions that are likely to be one-shot, such as the delivery of a drivers' license, and transactions that require frequent interactions between the parties and therefore allow for reputation building, such as yearly renewals of building permits. Finally, we examine officials' ability to collude by communicating before setting their bribe demands. We find that introducing competition significantly reduces corruption both in settings characterized by one-shot and by repeated interactions between citizens and officials. While the possibility to collusion lowers the effectiveness of competition, officials are unable to sustain collusion in the long run.
    Keywords: Extortionary Corruption, Monopoly, Competition, Collusion
    JEL: D73 D49 C92
    Date: 2016–10
  10. By: Sara Markowitz; E. Kathleen Adams; Mary Jane Lewitt, PhD,CNM; Anne Dunlop, MD
    Abstract: The demand for health care and healthcare professionals is predicted to grow significantly over the next decade. Securing an adequate health care workforce is of primary importance to ensure the health and wellbeing of the population in an efficient manner. Occupational licensing laws and related restrictions on scope of practice (SOP) are features of the market for healthcare professionals and are also controversial. At issue is a balance between protecting the public health and removing anticompetitive barriers to entry and practice. In this paper, we examine the controversy surrounding SOP restrictions for certified nurse midwives (CNMs). We use the variation in SOP laws governing CNM practice that has occurred over time in a quasi-experimental design to evaluate the effect of the laws on the markets for CNMs and their services, and on related maternal and infant outcomes. We focus on SOP laws that pertain to physician oversight requirements and prescribing rules, and examine the effects of SOP laws in geographic areas designated as medically underserved. Our findings indicate that SOP laws are neither helpful nor harmful in regards to maternal behaviors and infant health outcomes, but states that allow CNMs to practice with no SOP-based barriers to care have lower rates of induced labor and Cesarean section births. We discuss the implications of these findings for the policy debate surrounding SOP restrictions and for health care costs.
    JEL: I1 J44 K2
    Date: 2016–10
  11. By: Oana Borcan (University of East Anglia)
    Abstract: How do central politicians in young democracies secure electoral support at grass-roots level? I show that alignment with local governments is instrumental in swaying national elections via electoral fraud. Using a regression discontinuity design with Romanian local elections and a president impeachment referendum in 2012, I find higher referendum turnouts in localities aligned with the government coalition - the impeachment initiators. A variety of electoral forensics tests uncover abnormal vote count distributions across polling stations, consistent with null ballot stuffing and possibly vote buying. The alignment effect is driven by rural localities, those with weaker opposition party presence, and higher vote buying incidence in past elections. This illicit transfer from local to national government may explain the reverse clientelistic grants found in the intergovernmental transfers literature.
    Keywords: political economy, elections, electoral fraud, partisan alignment
    JEL: D72 D73 H7 K42
    Date: 2016–10–18
  12. By: Nishimura, Yoshinori
    Abstract: This paper analyzes whether the government intervention on the firm’s employment policy has an effect on the employment of the elderly. The pensionable age has increased in Japan. As a result, this policy makes a difference between the mandatory retirement age and the pensionable age. The Japanese government has obliged firms to employ elderly workers until they arrive at the pensionable age. According to the literature, the labor force participation rate of the elderly male workers increases after the implementation of this policy. However, according to the result in this paper, after omitting the unobserved heterogeneity and controlling the worker’s demographics, there is no effect on the employment of the elderly workers. This paper discusses why the effect of the government intervention on the demand side of the elderly labor market has no effect on the employment of the elderly. According to this discussion, it is possible that the firms avoid the cost which they will burden from the employment of the elderly worker by using measures which are not illegal while they only follow the directions which the law directly requires.
    Keywords: government intervention, labor market, social security
    JEL: J2 J7 K2
    Date: 2016–10–30
  13. By: John Asker; Heski Bar-Isaac
    Abstract: We consider vertical contracts where the retail market may involve search frictions. Minimum advertised price restrictions (MAP) act as a restraint on customers’ information and so can increase search frictions in the retail sector. Such restraints, thereby, soften retail competition—an impact also generated by resale price maintenance (RPM). However, by accommodating (consumer or retailer) heterogeneity, MAP can allow for higher manufacturer profits than RPM. We show that they can do so through facilitating price discrimination among consumers; encouraging service provision; and facilitating manufacturer collusion. Thus, welfare effects may be positive or negative compared to RPM or to the absence of such restrictions.
    JEL: K21 L13 L15 L22 L42
    Date: 2016–10

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