nep-law New Economics Papers
on Law and Economics
Issue of 2017‒03‒05
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Legally Irrelevant Factors in Judicial Decision-making: Battle Deaths and the Imposition of the Death Penalty in Nazi Germany By Geerling, Wayne; Magee, Gary; Raschky, Paul; Smyth, Russell
  2. Gun violence in the U.S.: Correlates and causes By Kukharskyy, Bohdan; Seiffert, Sebastian
  3. The economics of ownership, access and trade in digital data By Nestor Duch-Brown; Bertin Martens; Frank Mueller-Langer
  4. Gender disparities in criminal justice By Philippe, Arnaud
  5. Complex Factors Behind Misguided Policies in Socioeconomics: From Mass Migration and Persistent Alienation to Rampant Crime and Economic Malaise By Kim, Steven
  6. Immobilizing Corporate Income Shifting: Should It Be Safe to Strip in the Harbor? By Schindler, Dirk Steffen; Gresik, Thomas; Schindler, Dirk; Schjelderup, Guttorm
  7. Antitrust, Patents, and Cumulative Innovation: Evidence from Bell Labs By Nagler, Markus; Watzinger, Martin; Fackler, Thomas; Schnitzer, Monika
  8. Endogenous Driving Behavior in Veil of Darkness Tests for Racial Profiling By Jesse Kalinowski; Stephen L. Ross; Matthew B. Ross
  9. Competition, Patent Protection, and Innovation in an Endogenous Market Structure By Suzuki, Keishun
  10. Minimum Wages and Relational Contracts By Fahn, Matthias
  11. Party system institutionalization and reliance on personal income tax: Exploring the relationship using new data By Armin von Schiller
  12. Evaluating the effects of the structural labour market reforms on collective bargaining in Greece By Koukiadaki, Aristea.; Grimshaw, Damian.
  13. Employment effects of the new German minimum wage: Evidence from establishment-level micro data By Bossler, Mario; Gerner, Hans-Dieter
  14. The Power of Mandatory Quality Disclosure: Evidence from the German Housing Market By Vance, Colin; Frondel, Manuel

  1. By: Geerling, Wayne; Magee, Gary; Raschky, Paul; Smyth, Russell
    Abstract: We study the effect of legally irrelevant events on the sentencing outcomes of around 2,500 individual defendants, heard before the People's Court in Nazi Germany. Our analysis exploits exogeneous variation in battle deaths and estimates their effect on the likelihood of receiving the death penalty. According to our results, higher German fatalities on the battlefield systematically increased the chances of receiving the death penalty. We show that decisions by experienced judges were less affected by battle deaths, while judges who were more ideologically committed to the regime were more likely to impose the death penalty in response to hearing news of higher German fatalities. Our results are not driven by particular types of offenses or defendants, time periods, or changes in arrest patterns and are robust to the use of major bombing raids of German cities instead of battle deaths. We also find some evidence that victories of the German national soccer team decreased the chances of capital punishment.
    Keywords: courts, judicial decision-making, Nazi Germany
    JEL: K0 K4 N0
    Date: 2017–02–27
  2. By: Kukharskyy, Bohdan; Seiffert, Sebastian
    Abstract: This paper provides a county-level investigation of the root causes of gun violence in the U.S. To guide our empirical analysis, we develop a simple theoretical model which suggests that firearm-related offenses in a given county increase with the number of illegal guns and decrease with social capital and police intensity. Using detailed panel data from the Federal Bureau of Investigation for the period 1986-2014, we find empirical evidence for the causal effects of illegal guns, social capital, and police intensity consistent with our theoretical predictions. Based on our analysis, we derive a range of policy recommendations.
    Keywords: gun violence,illegal guns,social capital,police intensity
    JEL: K14 K42 J22 I18
    Date: 2017
  3. By: Nestor Duch-Brown (European Commission – JRC); Bertin Martens (European Commission – JRC); Frank Mueller-Langer (European Commission – JRC)
    Abstract: Despite the rapidly growing volume and economic importance of data in the digital economy, the legal framework for data ownership, access and trade remains incompletely defined in the EU and elsewhere. De facto data ownership dominates and often leads to fragmentation or anti-commons problems in data. Combined with limited access and trade, this inhibits the realisation of the full economic benefits of non-rival data. It may slow down innovation and affect the efficiency of data markets. We examine three potential sources of data market failures: externalities related to economies of scope in data, strategic behaviour of data owners and transaction costs in data exchanges. We link the legal debate on data ownership with relevant branches of the economics literature, including intellectual property rights economics, the commons and anti-commons literature, models of trade under the Arrow Information Paradox and multi-sided markets. Economists are inclined to think that well-defined private property rights are a necessary condition for an efficient resource allocation. The question in this paper is to what extent this view holds for non-rival data. We show that the allocation of data ownership or residual control rights matters, not only for private benefits but also for social welfare. The outcomes of bargaining over data ownership and access rights do not necessarily maximize social welfare. Can regulators intervene to improve these outcomes? Would a better specification of legal ownership rights or introducing access provisions to improve efficiency and reduce data market failures? There are no easy answers to these largely empirical questions. We offer no policy solutions yet and more research is required to bring economics up to speed with these questions.
    Keywords: digital single market, data economy, anti-commons, copyright, data trade, data ownership, property rights
    JEL: D23 K11 K12 L86
    Date: 2017–02
  4. By: Philippe, Arnaud
    Abstract: This paper uses the universe of convictions occurred in France between 2000 and 2003 to document the gender gap in criminal justice. First, during this period, and after controlling for very precise description of the offenses as well as other observable characteristics, women get prison sentences 15 days shorter than men on average. This represents a 33% decrease in comparison to the average prison length in the sample (44 days). Second, this gender gap is also observed within pairs of criminals, each consisting of one man and one woman, who are convicted together, on the same day, by the same person and for the same crime. Lastly, this paper present robust evidences that the gender gap is affected by the judges' gender but not the prosecutors' gender. Using the evolution of courts' composition between 2000 and 2003, results show that a one-standard-deviation increase in the number of women in the court decreases the gender gap by 10%.
    Keywords: criminal justice; sentencing; gender gap
    Date: 2017–02
  5. By: Kim, Steven
    Abstract: In a complex and chaotic world, people often gloss over the facts and jump to conclusions. Unfortunately, the hasty approach usually yields deficient and even harmful results. The domains affected range from migration and poverty to alienation and crime. According to the Myth of Boon, for instance, immigrants always benefit the host society. In this light, many people envisage the great migrations of the 19th century from Europe to America. However, the United States at that stage was itself a developing country; moreover the Civil War showed that clashing cultures cannot co-exist. Meanwhile the Myth of Multiculturalism asserts that a mashup of mores is always desirable; but the reality is otherwise. When immigrants in their millions pour into sparsely populated districts, they end up replicating the cultures that caused them to flee their homelands in the first place. The upshot is disruptive and distressing for all parties be they newcomers or incumbents. In addition, the Myth of Virtue declares that migrants of all backgrounds are equally upright. Yet comprehensive studies in Sweden have shown that violent crimes can be traced to immigrants at rates which are at least four times those for natives. From another angle, a drove of migrants is a godsend for criminals. For instance, a terrorist ring struck in France in 2015 and again in Belgium the following year. The perpetrators – who grew up in Belgium, France and Sweden – displayed immigrant backgrounds and included part of the cohort that traveled to the Mideast to receive training from militants then returned to Europe by posing as refugees. Since socioeconomic problems are intertwined rather than independent, a piecemeal approach will not fill the bill. Instead, a coherent grasp of the issues and their tie-ups is a prerequisite for devising a wholesome solution.
    Keywords: Socioeconomics, Policy, Migration, Poverty, Alienation, Crime, Society, Culture, Multiculturalism
    JEL: A14 D10 E10 E66 F5 H1 I3 J1 K42 N3 N4 O1
    Date: 2016–09
  6. By: Schindler, Dirk Steffen; Gresik, Thomas; Schindler, Dirk; Schjelderup, Guttorm
    Abstract: Many subsidiaries can deduct interest payments on internal debt from their taxable income. By issuing internal debt from a tax haven, multinationals can shift income out of host countries through the interest rates they charge and the amount of internal debt they issue. We show that, from a welfare perspective, thin-capitalization rules that restrict the amount of debt for which interest is tax deductible (safe harbor rules) are inferior to rules that limit the ratio of debt interest to pre-tax earnings (earnings stripping rules), even if a safe harbor rule is used in conjunction with an earnings stripping rule.
    JEL: H26 H25 K34
    Date: 2016
  7. By: Nagler, Markus; Watzinger, Martin; Fackler, Thomas; Schnitzer, Monika
    Abstract: How large is the impact of intellectual property on cumulative innovation in electronics, computers and communications? Following an antitrust lawsuit against Western Electric and AT&T, Bell Labs had to license all patents published by 1956 for free. We find that this removal of patent rights increased subsequent citations to Bell’s patents by 7%. Patenting in affected patent subclasses increased by 17%. The effect comes from young and small firms in fields in which Bell did not remain commercially active. Placebo regressions support the identification assumption of parallel trends in citations.
    JEL: O31 O33 L43
    Date: 2016
  8. By: Jesse Kalinowski (Quinnipiac University); Stephen L. Ross (University of Connecticut); Matthew B. Ross (Ohio State University)
    Abstract: Several prominent applications of the Veil of Darkness (VOD) test, where solar variation is used to identify racial profiling in traffic stops, have found reverse discrimination in cities widely purported to disproportionately target minorities. We develop a theoretical model of traffic enforcement and demonstrate that the VOD test for racial profiling cannot distinguish between discrimination and reverse discrimination. In our model, this problem arises because motorists rationally alter their driving behavior when faced with discriminatory policing. For groups that face discrimination, our model implies that motorists who previously did not speed choose to speed in darkness, when demography cannot be observed, thus creating the possibility that the share of stopped minority motorists increases in darkness. We develop a follow-up test for identifying the direction of differential treatment by examining the speed distribution of motorists across daylight and darkness. Using data on traffic stops in Massachusetts made by State and Local Police, we reject the VOD test for equal treatment and demonstrate that driving speeds of stopped African-Americans are higher in darkness consistent with discrimination.
    Keywords: Police, Crime, Discrimination, Racial Profiling, Disparate Treatment, Traffic Stops
    JEL: H1 I3 J7 K14 K42
    Date: 2017–02
  9. By: Suzuki, Keishun
    Abstract: This study revisits the relationship between competition and innovation by incorporating an endogenous market structure (EMS) in a dynamic general equilibrium model. We consider that both innovative and non-innovative followers engage in Cournot competition with free entry. A competition-enhancing policy, which reduces entry cost, can stimulate the entry of innovative followers when the entry cost is high. However, when the entry cost is sufficiently low, the entry of non-innovative followers crowd-out innovative followers from the market. As a result, there is a non-monotonic relationship (inverted-V shape) between competition and innovation. Furthermore, we show that, while strengthening patent protection positively affects innovation when competition is sufficiently intense, the effect may be negative under milder competition. This suggests that a competition policy could complement a patent policy.
    Keywords: Competition, Patent Protection, Innovation, Endogenous Market Structure
    JEL: O30 O40
    Date: 2017–02–25
  10. By: Fahn, Matthias
    Abstract: The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified, which implies that relational contracts have to be used to provide incentives. The present article shows that in this case, a minimum wage increases implemented effort, i.e., realized service quality, as well as the efficiency of an employment relationship. Hence, it can be explained why productivity and service quality went up after the introduction of the British National Minimum Wage, and that this might actually have caused a more efficient labor market. Furthermore, if workers have low bargaining power, a higher minimum wage also increases firm profits and consequently employment. Therefore, the present article presents a new perspective on reasons for why minimum wages often have no or only negligible employment effects.
    JEL: C73 D21 J31
    Date: 2016
  11. By: Armin von Schiller
    Abstract: This paper explores the effect of party system institutionalization on the reliance of tax systems on the personal income tax. As a first step, the paper re-examines the relationship between party system institutionalization and taxation patterns employing the recently launched Government Revenue Dataset. In a second step, the relationship in tested in different country subgroups, based on governance structures, availability of alternative sources of revenue, and geographical location. The main results remain fairly robust using the Government Revenue Dataset: where bureaucratic capacity is low, the effect of party system institutionalization is large and highly significant, whereas where bureaucratic capacity is high this effect disappears. Furthermore, the analysis using the Government Revenue Dataset provides additional insights into the large variance between groups of countries. The results indicate that the effect is particularly strong and robust in democratic regimes and where alternative sources of revenue are abundant. Overall, the findings can be considered to provide additional support for two claims: first, that taxation is best understood as a problem of credible commitment, particularly where bureaucratic capacity tends to be limited, and second, that institutionalized collective actors, such as political parties, play a key role in solving this problem.
    Date: 2017
  12. By: Koukiadaki, Aristea.; Grimshaw, Damian.
    Abstract: In assessing the impact at firm, sectoral and cross-sectoral level the report seeks to identify what arrangements can be compatible with the goals of promoting sustainable and inclusive growth. Methodologically, the report has been compiled by relying on a number of tested deskbased and empirical research tools utilizing published quantitative data, mining our existing qualitative data and conducting new empirical research in the service sector. The report builds on a legal analysis of primary and secondary sources, a state-of-the-art review of economics and comparative industrial relations research, a quantitative (descriptive) analysis of collective agreements, analysis of interview data with key informants plus documentary material at sectoral/occupational level, and original casestudy evidence at company level. In parts, the report relies on and updates research already conducted by the team on the crisis-related measures affecting labour market regulation and their potential implications for joint regulation via collective bargaining.
    Keywords: collective bargaining, legal aspect, law reform, social dialogue, Greece
    Date: 2016
  13. By: Bossler, Mario; Gerner, Hans-Dieter
    Abstract: In Germany a new statutory minimum wage of € 8.50 per hour of work was introduced on 1 January 2015. We identify employment effects using variation in the establishment-level affectedness. The data allow addressing anticipatory wage adjustments as well as spillover effects within and across workplaces. Difference-in-differences estimation reveals an increase in average wages by 4.8 percent and an employment reduction by about 1.9 percent in affected establishments. These estimates imply an employment elasticity with respect to wages of about -0.3. Looking at the associated labor flows, the employment effect seems mostly driven by a reduction in hires but also by a small increase in separations. Moreover, the employment neutral turnover rate decreases. When analyzing alternative adjustment margins, we observe a reduction in the typical contracted working hours but no effects on freelance employment.
    JEL: C23 J23 J38
    Date: 2016
  14. By: Vance, Colin; Frondel, Manuel
    Abstract: To mitigate information asymmetry problems with respect to the thermal quality of houses, many countries have introduced Energy Performance Certificates (EPCs). Using big data on real estate advertisements that cover large parts of the German housing market, this paper empirically investigates the consequences of a shift from a voluntary to a mandatory quality disclosure regime on the offer prices of houses. Motivated by a stylized theoretical model, we test the following key hypothesis: Prices for houses whose owners would not voluntarily disclose their house’s energy consumption in real estate advertisements should decrease upon a shift to a mandatory disclosure scheme. Employing an instrumental variable approach to cope with the endogeneity of disclosure decisions, our analysis demonstrates the relative advantage of mandatory over voluntary disclosure rules.
    JEL: D82 L15 Q58
    Date: 2016

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