nep-law New Economics Papers
on Law and Economics
Issue of 2017‒02‒05
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Larrikin youth: new evidence on crime and schooling By Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
  2. Jobs, Crime, and Votes: A Short-run Evaluation of the Refugee Crisis in Germany By Gehrsitz, Markus; Ungerer, Martin
  3. Does the placement of the accused at court undermine the right to a fair trial? By Meredith Rossner
  4. Causes and Effects of Corruption: What has Past Decade's Research Taught us? A Survey By Dimant, Eugen; Tosato, Guglielmo
  5. Does Anti-Bribery Enforcement Deter Foreign Investment? By Brad Graham; Caleb Stroup
  6. Blockchain's Struggle to Deliver Impersonal Exchange By Benito Arruñada
  7. How Do Patents Affect Research Investments? By Heidi L. Williams
  8. Prospect theory and the effects of bankruptcy laws on entrepreneurial aspirations By Saul Estrin; Tomasz Mickiewicz; Anna Rebmann
  9. Comparing Apples to Oranges: Differences in Women’s and Men’s Incarceration and Sentencing Outcomes By Kristin F. Butcher; Kyung H. Park; Anne Morrison Piehl
  10. Would I lie to you? Strategic deception in the face of uncertain penalties By Cardak, Buly A; Neelim, Ananta; Vecci, Joseph; Wu, Kevin
  11. The Logic and Issues of International Regional Tax Integration By Kudryashova, Ekaterina
  12. Decentralized Bargaining and the Greek Labour Relations Reform (Law 4024/2011) By Giannakopoulos, Nicholas; Laliotis, Ioannis
  13. The implications of book-tax differences: A meta-analysis By Evers, Maria Theresia; Meier, Ina; Nicolay, Katharina

  1. By: Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
    Abstract: This paper reports new evidence on the causal link between education and male youth crime using individual level state-wide administrative data for Queensland, Australia. Enactment of the Earning or Learning education reform of 2006, with a mandatory increase in minimum school leaving age, is used to identify a causal impact of schooling on male youth crime. The richness of the matched (across agency) individual level panel data enables the analysis to shed significant light on the extent to which the causal impact reflects incapacitation, or whether more schooling acts to reduce crime after youths have left compulsory schooling. The empirical analysis uncovers a significant incapacitation effect, as remaining in school for longer reduces crime whilst in school, but also a sizeable crime reducing impact of education for young men in their late teens and early twenties. We also carry out analysis by major crime type and differentiate between single and multiple offending behaviour. Crime reduction effects are concentrated in property crime and single crime incidence, rather than altering the behaviour of the recalcitrant persistent offender
    Keywords: youth crime; schooling
    JEL: I2 K42
    Date: 2016–11
  2. By: Gehrsitz, Markus (University of Strathclyde); Ungerer, Martin (ZEW Mannheim)
    Abstract: Millions of refugees made their way to Europe between 2014 and 2015, with over one million arriving in Germany alone. Yet, little is known about the impact of this inflow on labor markets, crime, and voting behavior. This article uses administrative data on refugee allocation and provides an evaluation of the short-run consequences of the refugee inflow. Our identification strategy exploits that a scramble for accommodation determined the assignment of refugees to German counties resulting in exogeneous variations in the number of refugees per county within and across states. Our estimates suggest that migrants have not displaced native workers but have themselves struggled to find gainful employment. We find very small increases in crime in particular with respect to drug offenses and fare-dodging. Our analysis further suggests that counties which experience a larger influx see neither more nor less support for the main anti-immigrant party than counties which experience small migrant inflows.
    Keywords: immigration, refugees, unemployment, crime, voting
    JEL: J6 J15 K4 D72
    Date: 2017–01
  3. By: Meredith Rossner
    Abstract: The UK Government has recently launched an ambitious reform of the court estate across England and Wales, including the closure of 86 courts and signi cant investment in new technologies. The time is right to rethink how courts of the future should look, with an emphasis on exibility of space and the use of technology. A longstanding architectural feature of criminal courts is the dock, where the accused is held during a trial. In recent years, this has evolved to include a fully-glassed in box, or in some countries, metal cages. The continued use of docks may undermine the rights of the accused, including the right to participate in one’s trial, the right to be presumed innocent, and the right to be treated in a digni ed manner. I present the results of an experiment testing whether the placement of the accused in a dock can impact on mock-jurors assessment of guilt. Jurors were more likely to return a guilty verdict when the accused was in a dock, compared to sitting at the bar table with counsel, independent of the evidence against him. If the government is serious about creating fairer and more effective courts of the future, then they need discontinue the use of docks in criminal trials.
    Keywords: Court architecture; criminal trial; human rights
    JEL: K10 K4 K41
    Date: 2016–12–18
  4. By: Dimant, Eugen; Tosato, Guglielmo
    Abstract: Corruption has fierce impacts on economic and societal development and is subject to a vast range of institutional, jurisdictional, societal, and economic conditions. It is this paper’s aim to provide a reassessment and a comprehensive state-of-the-art survey of existing literature on corruption and its causes and effects. A particularly strong focus is put on presenting and discussing insights resulting from empirical research and contrasting recent with older findings.
    Keywords: Bribery; Causes of corruption; Corruption; Effects of corruption; Survey
    JEL: D73 F63 H1 K42 O17
    Date: 2017
  5. By: Brad Graham (Department of Economics, Grinnell College); Caleb Stroup (Department of Economics, Davidson College)
    Abstract: We hand-collect data on individual FCPA enforcement actions initiated by the U.S. Department of Justice and use them in a panel difference-in-difference estimator to provide the first systematic empirical evidence that anti-bribery enforcement is followed by a reduction in U.S. fixed capital investments in countries targeted by enforcement actions. Publication Status: Published in Applied Economics Letters, 2016, 23(1):63-67.
    Keywords: Foreign Corrupt Practices Act, multinational firms, cross-border mergers, foreign direct investment, anti-bribery legislation
    JEL: F21 K22 G38
    Date: 2015–05
  6. By: Benito Arruñada
    Abstract: With its decentralized peer-to-peer structure, application of the blockchain technology underpinning Bitcoin holds the promise of making impersonal exchange possible for all types of old and new transactions in all types of markets. Such theoretical promise is examined here by identifying what value blockchain adds to the contractual process, exploring its contractual potential and analyzing the main difficulties it is facing. The article argues that blockchain applications will evolve towards dual structures separating causal and formal transactions. Complementarily and contrary to naive conceptions that proclaim the end of intermediaries and state involvement, such applications will rely on a variety of interface and enforcement specialists, including standard public interventions, especially for property transactions. Without these interventions, blockchain will at most work as an in personam—instead of as an in rem— system, therefore facilitating mere personal instead of impersonal transactions.
    Keywords: property rights, enforcement, transaction costs, impersonal exchange, blockchain, distributed ledgers.
    JEL: D23 K11 K12 L85 G38 H41 O17 P48
    Date: 2017–01
  7. By: Heidi L. Williams
    Abstract: While patent systems have been widely used both historically and internationally, there is nonetheless a tremendous amount of controversy over whether patent systems – in practice – improve the alignment between private returns and social contributions. In this paper, I describe three parameters – how the disclosure function affects research investments, how patent strength affects research investments in new technologies, and how patents on existing technologies affect follow-on innovation – needed to inform the question of how patents affect research investments, and review the available evidence which has attempted to empirically estimate these parameters.
    JEL: H41 K0 O3 O34
    Date: 2017–01
  8. By: Saul Estrin; Tomasz Mickiewicz; Anna Rebmann
    Abstract: We apply prospect theory to explain how personal and corporate bankruptcy laws affect risk perceptions of entrepreneurs at time of entry and therefore their growth ambitions. Previous theories have reached ambiguous conclusions as to whether countries with more debtor-friendly bankruptcy laws (i.e. laws that are more forgiving towards debtors in bankruptcy proceedings) are likely to have more entrepreneurs, or whether, creditor-friendly regimes have positive effects on new ventures via enhanced incentives for the supply of credit to entrepreneurs. Responding to this ambiguity, we apply prospect theory to propose that entrepreneurs do not attach the same significance to different elements of bankruptcy codes—and to explain which aspects of debtor-friendly bankruptcy laws matter more to entrepreneurs. Based on this, we derive and confirm hypotheses about the impact of aspects of bankruptcy codes on entrepreneurial activity using the Global Entrepreneurship Monitor combined with data on both personal and corporate bankruptcy regulations for 15 developed OECD countries. We use multilevel random coefficient logistic regressions to take account of the hierarchical nature of the data (country and individual levels). Because entrepreneurs and creditors are sensitive to different elements of the codes, there is scope for optimisation of the legal design of bankruptcy law to achieve both an adequate supply of credit and to encourage high-ambition entrepreneurship.
    Keywords: Entrepreneurship;High-aspiration entrepreneurship; Bankruptcy; Global entrepreneurship monitor
    JEL: K22
    Date: 2016
  9. By: Kristin F. Butcher; Kyung H. Park; Anne Morrison Piehl
    Abstract: Using detailed administrative records, we find that, on average, women receive lighter sentences in comparison with men along both extensive and intensive margins. Using parametric and semi-parametric decomposition methods, roughly 30% of the gender differences in incarceration cannot be explained by the observed criminal characteristics of offense and offender. We also find evidence of considerable heterogeneity across judges in their treatment of female and male offenders. There is little evidence, however, that tastes for gender discrimination are driving the mean gender disparity or the variance in treatment between judges.
    JEL: J16 K14 K42
    Date: 2017–01
  10. By: Cardak, Buly A (Department of Economics and Finance, La Trobe Business School, La Trobe University); Neelim, Ananta (School of Economics, Finance and Marketing, RMIT University); Vecci, Joseph (Department of Economics, School of Business, Economics and Law, Göteborg University); Wu, Kevin (Department of Economics, Monash University, Australia)
    Abstract: Using an experiment we investigate the effect of different centralised punishment mechanisms on deception and beliefs about deception in a principal-agent interaction that resembles many everyday expert advisor - client relationships. Agents have private information to transmit to Principals who must decide whether to follow Agent advice. Across our treatments, Agents face a range of expected penalties for deceptive behaviour with varying severity and monitoring probability. The Bayesian Nash equilibrium of the principal-agent interaction predicts penalties to have no effect on Agent behaviour. We find the magnitude of penalties to have important deterrent effects on deceptive Agent behaviour while Agents do not respond to changes in monitoring probabilities. Principal following behaviour increases in response to high penalties. However, it is unaffected by equivalent increases in monitoring. To help us understand the mechanism through which penalties deter deceptive behaviour, we test whether framing activates norms, providing an additional deterrence effect. We find norms are only activated by large penalties, providing a possible explanation for the impact of penalties on deceptive behaviour.
    Keywords: Punishment; Deception; Principal Agent; Norm Induced Behaviour
    JEL: C91 K42 L51
    Date: 2017–01
  11. By: Kudryashova, Ekaterina
    Abstract: The article is devoted to the issues of international regional tax integration. The international economic integration has two mainstreams: global and regional economic integration. The global tax integration is concerned only with double taxation matters while the regional tax integration aims at procuring of four fundamental freedoms of common market and goes far beyond the elimination of double taxation. The legal solution for both global and regional international tax integration can not be found on the base of traditional conflict of laws method (sometimes called collision technique). Only the substantive law instruments meet the needs of both types of tax integration. The experience of international regional tax integration shows the examples of integration (or community) tax law system formation which include both supra-national and national sources of law. The tax harmonization is usually started with indirect taxes and indirect taxes harmonization reaches the highest level. The tax harmonization covers the tax administration issues. The direct taxes are usually harmonized later and only with reference to selected issues. Taxes are part of sovereignty which is vested in particular state therefore supra-national entities do not have their own tax systems.
    Keywords: tax harmonization, international economic integration, the European Union, european tax law, community tax law, international tax law, tax administration, indirect taxes, VAT, excise duties, taxes on income and capital
    JEL: F1 F10 F36 F6 H2 H3 K0
    Date: 2016
  12. By: Giannakopoulos, Nicholas; Laliotis, Ioannis
    Abstract: We investigate decentralized collective bargaining in Greece (2002-2016) under the industrial relations reform implemented in 2011. We match administrative data on firm-level contracts with non-participating firms to estimate determinants of decentralized bargaining before and after the reform. Decentralized bargaining increased in the post-reform period depending on firm size, industry and location. Nominal wage floors downgraded after 2011 in contacts signed by association of persons rather than trade unions. A base wage premium of 22 percent is found in favour of trade unions. Firm-level bargaining with trade unions is expected to promote decentralized bargaining with outcomes linked to firm-specific characteristics.
    Keywords: Labour relations; Decentralized collective bargaining; Nominal wages; Reform; Greece
    JEL: J31 J41 J52
    Date: 2017–01–31
  13. By: Evers, Maria Theresia; Meier, Ina; Nicolay, Katharina
    Abstract: Over the last decade, a large body of tax accounting literature on the association between book-tax conformity (BTC)/book-tax differences (BTD) and firms' opportunistic reporting behavior has emerged. Yet, existing empirical evidence on the questions whether increased book-tax conformity actually reduces Earnings Management (EM) and/or Tax Sheltering (TS) and whether book-tax differences are really indicative of such opportunistic reporting behavior is not yet clear. We therefore conduct a meta-analysis aimed at identifying the sources of heterogeneity in primary studies and at providing a consensus estimate with respect to the sign and the statistical significance level for the examined association. Our qualitative literature review reveals that major sources of heterogeneity in the study design include differences in the proxies for EM and TS and in the measures used to determine BTD and BTC. Our meta-regression results show that BTD are indeed indicative of opportunistic reporting behavior, and even more so of EM. These results are, however, weaker for studies that determine BTD only roughly as the difference between book and estimated taxable income instead of using more specific BTD proxies. Moreover, examining actual BTD computed from tax returns instead of only approximating these from financial statements strongly increases the effects. Hence, efforts taken to accurately determine BTD seem to be worth wile when it comes to the explanatory power for opportunistic reporting. Furthermore, our results suggest a negative association between book-tax conformity and EM/TS, which we interpret as an indicator for higher conformity indeed being effective in reducing aggressive reporting.
    Keywords: book-tax conformity,book-tax differences,tax sheltering,earnings management,meta-analysis
    JEL: H20 H26 K34 M41
    Date: 2017

This nep-law issue is ©2017 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.