nep-law New Economics Papers
on Law and Economics
Issue of 2017‒02‒12
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. An Institutional Approach to Trade Unions’ Density. The Case of Legal Origin and Political Ideology By Jacek Lewkowicz; Anna Lewczuk
  2. Determinants of Property Rights Protection in Sub-Saharan Africa By Asongu, Simplice; Kodila-Tedika, Oasis
  3. The Sorry Clause (revision of CentER DP 2016-008) By Srivastava, Vatsalya
  4. Expert opinion in a tort litigation game By Yves Oytana; Nathalie Chappe
  5. The Effect of Medical Marijuana Laws on the Labor Supply of Older Adults: Evidence from the Health and Retirement Study By Hersch Nicholas, Lauren; Maclean, J. Catherine
  6. Altruistic Norm Enforcement and Decision-Making Format in a Dilemma: Experimental Evidence By Kamei, Kenju
  7. Statutory Minimum Wages in the EU: Institutional Settings and Macroeconomic Implications By Arpaia, Alfonso; Cardoso, Pedro; Kiss, Aron; Van Herck, Kristine; Vandeplas, Anneleen
  8. The deterrence effect of real-world operational tax audits By Gabriele, Mazzolini; Laura, Pagani; Alessandro, Santoro;

  1. By: Jacek Lewkowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Anna Lewczuk (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Which institutions may be important in terms of trade unions’ density and how significant they are? However, trade unions’ status is very different among states, they are still a very meaningful component of labor markets. In this paper we contribute to the debate on the institutions, which may affect the outcome of trade unions in different legal systems. Firstly, we draw on theoretical underpinnings of trade unions’ activity and density. Then, we conduct an empirical analysis of the relationships between trade union density in a particular country, its legal origin and government’s ideology. In this way the paper enriches an underexploited niche in institutional research devoted to labor market issues.
    Keywords: new institutional economics, institutions, political economy, trade unions, labor market, legal origin, parties’ ideologies
    JEL: J51 K31 K40 P16
    Date: 2017
  2. By: Asongu, Simplice; Kodila-Tedika, Oasis
    Abstract: This article complements existing literature by assessing determinants of property rights protection with particular emphasis on history, geography and institutions in Sub-Saharan Africa. The empirical evidence is based on a sample of 47 countries for the period 2000-2007. Random effects GLS regressions are employed using property rights measurements from the Mo Ibrahim and Heritage foundations. The results broadly show that ethnic fractionalisation, Polity IV and GDP per capita have positive effects on property rights institutions while the following have negative effects: military rule, the Protestant religion, maturity from colonial independence and population density. The findings have relevant policy implications for countries in the sub-region currently on the path to knowledge-based economies.
    Keywords: Property rights protection; Panel data; Africa
    JEL: F42 K42 O34 O38 O57
    Date: 2016–03
  3. By: Srivastava, Vatsalya (Tilburg University, Center For Economic Research)
    Abstract: This paper shows the existence of a sorry equilibrium in a game of imperfect public monitoring. In equilibrium, a self-imposed costly apology tendered after an accidental defection, makes private information public, allowing for continued cooperation. This cost cannot be too high or too low. Efficiency of the sorry equilibrium is evaluated and its welfare outcomes compared to other informal governance mechanisms and the formal legal system. With the possibility of accidental defections, it is shown that informal mechanisms have limitations, while formal legal systems can generate perverse incentives. The analysis demonstrates that apologies serve as a useful economic governance institution.
    Keywords: apology; sorry; imperfect public monitoring; uncertainty; social norms; economics governance; Legal institutions; incentives; courts
    JEL: D80 K40 D02 Z13
    Date: 2017
  4. By: Yves Oytana (UBFC - Université Bourgogne Franche-Comté, CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté); Nathalie Chappe (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté, UBFC - Université Bourgogne Franche-Comté)
    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 e↵ects 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-o↵ between these two objectives.
    Keywords: Litigation,Expert,Expert testimony,Liability
    Date: 2016–11–01
  5. By: Hersch Nicholas, Lauren (Johns Hopkins University); Maclean, J. Catherine (Temple University)
    Abstract: We study the effect of state medical marijuana laws on labor supply among older adults; the demographic group with the highest rates of many health conditions for which marijuana may be an effective treatment. We use the Health and Retirement Study to study this question and estimate differences-in-differences regression models. We find that passage of a state medical marijuana law leads to increases in labor supply among older adults. These effects should be considered as policymakers determine how best to regulate access to medical marijuana.
    Keywords: older adults, labor supply, medical marijuana, regulation, medication
    JEL: I10 I18 J20
    Date: 2017–01
  6. By: Kamei, Kenju
    Abstract: Past research has shown that people often take punitive actions towards norm violators even when they are not directly involved in transactions. However, it at the same time suggests that such third-party punishment may not be strong enough to enforce cooperation norms in dilemma situations. This paper experimentally compares the effectiveness of third-party punishment between different enforcement formats. Consistent with past studies, our data shows that having an individual third-party punisher in a group does not make one’s defection materially unbeneficial because of the weak punishment intensity. It also shows that third-party punishment is not effective when two individuals form a pair as a punisher and jointly decide how strong third-party punishment they impose. However, third-party punishment can be sufficiently strong to enforce cooperation norms when a third-party punisher’s action choice is made known to another individual third-party punisher in a different group, or when there are two independent individual third-party players in a group.
    Keywords: experiment, cooperation, dilemma, third-party punishment, social norms
    JEL: C92 D79 H41
    Date: 2017–02–06
  7. By: Arpaia, Alfonso (European Commission); Cardoso, Pedro (European Commission, Directorate Employment, Social Affairs and Inclusion); Kiss, Aron (European Commission); Van Herck, Kristine (European Commission, Directorate Employment, Social Affairs and Inclusion); Vandeplas, Anneleen (European Commission, Directorate Employment, Social Affairs and Inclusion)
    Abstract: This paper analyses some macroeconomic implications of the statutory minimum wage in the member states of the European Union and assesses how its institutional design influences these outcomes. First, the paper looks at the institutional dimensions of statutory minimum wage setting. On the basis of this information, an indicator of institutional stringency is built to characterise the degree of predictability of minimum wage setting. Second, it explores the impact of minimum wage changes on employment, prices, consumption, and poverty.
    Keywords: minimum wage, statutory minimum wage, composite indicator, poverty, in-work poverty, European Union
    JEL: J38 J52 E24 I32
    Date: 2017–02
  8. By: Gabriele, Mazzolini; Laura, Pagani; Alessandro, Santoro;
    Abstract: We use a large administrative tax-returns panel dataset merged with tax audit database to estimate the effect of real-world operational tax audits on subsequent tax behavior. Our identification strategy and the institutional setting that we consider enable us to address potential endogeneity related to non-random selection of taxpayers to be audited. We find a positive and lasting effect of audits on subsequent reported income. However, in line with theoretical predictions, taxpayers do not increase tax compliance when the tax authority does not assess a positive additional income. Our results are robust to a variety of specifications and samples.
    Keywords: Tax Compliance, Administrative Panel Data, Tax Audits
    JEL: H26 C23 C55
    Date: 2017–02–03

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