nep-law New Economics Papers
on Law and Economics
Issue of 2017‒03‒12
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. You Drink, You Drive, You Die? The Dynamics of Youth Risk Taking in Response to a Change in the Legal Drinking Age By Boes, Stefan; Stillman, Steven
  2. Settlement Offers By Schumacher, Heiner; Karle, Heiko; Volund, Rune
  3. Democratic Involvement and Immigrants' Compliance with the Law By Slotwinski, Michaela; Stutzer, Alois; Gorinas, Cédric
  4. Mandatory Minimums and the Sentencing of Federal Drug Crimes By Bjerk, David J.
  5. The Fall of Capital Punishment and the Rise of Prisons: How Punishment Severity Affects Jury Verdicts By Bindler, Anna; Hjalmarsson, Randi
  6. Reverting to Informality: Unregistered Property Transactions and the Erosion of the Titling Reform in Peru By Gutierrez, Italo A.; Molina, Oswaldo
  7. Religion, Sexual Minorities and the Rule of Law in Russia: Mutual Challenges By Mikhail Antonov
  8. Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization By Dix-Carneiro, Rafael; Soares, Rodrigo R.; Ulysse, Gabriel
  9. The accidental Trojan horse: Plea bargaining as an anticorruption tool in Brazil By Fausto de Assis Ribeiro
  10. The firm location race – Regulating incentive packages given to firms by local and regional governments By Hanke, Philip; Philip, Hanke; Klaus, Heine
  11. Political Specialization By Bernardo Guimaraes; Kevin D. Sheedy
  12. Licensing contracts and the number of licenses under screening By Antelo, Manel; Antonio, Sampayo
  13. The Effect of Workplace Inspections on Worker Safety By Ling Li; Perry Singleton
  14. Immigrant Fertility in the Midst of Intensified Enforcement By Amuedo-Dorantes, Catalina; Arenas-Arroy, Esther

  1. By: Boes, Stefan (University of Lucerne); Stillman, Steven (Free University of Bozen/Bolzano)
    Abstract: This paper exploits the reduction in the legal drinking age in New Zealand from 20 to 18 to study the dynamics of youth risk taking. Using administrative data on the universe of road accidents over a fifteen year period spanning the law change, we undertake three complimentary analyses to examine the dynamics of alcohol-related and total vehicular accidents among youth. First, using an event history approach, we find no evidence that changing the drinking age from 20 to 18 led to more vehicular accidents or alcohol-related accidents among teens. This is true both in the short-run following the law change and when examining cumulative accidents for the affected cohorts. Next, using an age-based regression discontinuity design (RDD), we find that accidents do increase after one's 18th birthday, but this appears to be a short-run phenomenon. Finally, estimating flexible parametric regression models suggests that reducing the drinking age led to a decline in risky driving by youth who were already 15 at the time of the change but had no longer-run impacts. Overall, our results support the argument that the legal drinking age can be lowered without increasing detrimental outcomes for youth and call into question previous studies that have made policy recommendations by extrapolating from results identified using age-based RDDs.
    Keywords: drinking age, vehicular accidents, regression discontinuity design, dynamics, New Zealand
    JEL: I18 K42 C25
    Date: 2017–02
  2. By: Schumacher, Heiner; Karle, Heiko; Volund, Rune
    Abstract: We analyze how early settlement offers affect Nash bargaining outcomes when agents are asymmetrically informed about the distribution of bargaining powers and exhibit expectations-based loss-aversion preferences. Before the start of the bargaining process, the sender has private information about the receiver’s bargaining power. His settlement offers may convey this private information so that they change the receiver’s expectations and, by loss aversion, preferences. We show that the sender can exploit this mechanism by making non-binding settlement offers, i.e., the receiver is free to accept them at any time, even after learning her true bargaining value.
    JEL: C78 D03 K12
    Date: 2016
  3. By: Slotwinski, Michaela (University of Basel); Stutzer, Alois (University of Basel); Gorinas, Cédric (Danish National Centre for Social Research (SFI))
    Abstract: Many people are concerned about societal cohesion in the face of higher numbers of foreigners migrating to Western democracies. The challenge for the future is to find and adopt institutions that foster integration. We investigate how the right to vote in local elections affects immigrants' compliance with the law. In our study for Denmark, we exploit an institutional regulation that grants foreigners local voting rights after three years of stay. Relying on register data, we find causal evidence that the first possibility to vote considerably reduces the number of legal offenses of non-Western male immigrants in the time after elections.
    Keywords: migration, voting rights, immigrant integration, crime, RDD
    JEL: D02 K42 J15
    Date: 2017–02
  4. By: Bjerk, David J. (Claremont McKenna College)
    Abstract: The United States federal mandatory minimums have been controversial not only because of the length of the mandatory sentences for even first-time offenders, but also because the eligibility quantities for crack are very small when compared to those for other drugs. This paper shows that the actual impact of these mandatory minimums on sentencing is quite nuanced. A large fraction of mandatory minimum eligible offenders, particularly first-time offenders, are able to avoid these mandatory minimums. Moreover, despite lower quantity eligibility thresholds for crack, a smaller fraction of crack offenders are eligible for mandatory minimums relative to other drugs. Furthermore, while being just eligible for a mandatory minimum increases sentence length on average, the impact is not uniform across drugs. Notably, sentences for crack offenders are generally sufficiently long such that, on average, sentences for crack offenders are not impacted by eligibility for a mandatory minimum. In summary, the discrepancy in federal sentencing between crack offenders and those convicted for other drugs does not appear to be driven by mandatory minimums, but rather other aspects of federal sentencing policy and norms.
    Keywords: mandatory minimum sentencing, crack cocaine, sentencing guidelines
    JEL: J15 K14 K40
    Date: 2017–02
  5. By: Bindler, Anna; Hjalmarsson, Randi
    Abstract: This paper studies the effect of punishment severity on jury decision-making using a large archival data set from the Old Bailey Criminal Court in London from 1715 to 1900. We take advantage of two natural experiments in English history, which result in sharp decreases in punishment severity: the offense specific abolition of capital punishment in the 1800s and the temporary and unexpected halt of penal transportation during the American Revolution. Using a difference-in-differences design to study the former and a pre-post design to study the latter, we find that decreasing expected punishment (especially via the end of the death penalty), had a large, significant and permanent impact on jury behavior, generally leading to the jury being "harsher". Moreover, we find that the size of the effect differs with defendants' gender and criminal history. These results raise concerns about the impartiality of juries as well as the implicit assumption often made when designing and evaluating criminal justice policies today - that the chance of conviction is independent of the harshness of the penalty.
    Keywords: conviction; crime; death penalty; English history; expected punishment; jury; punishment severity; verdict
    JEL: H00 K14 K40 N00 N43 N93
    Date: 2017–03
  6. By: Gutierrez, Italo A.; Molina, Oswaldo
    Abstract: Titling programs have focused mostly on providing initial tenure security and have not properly addressed maintaining the formality of future property transactions. Our data indicates that properties become de-regularized due to unregistered transactions in urban slums, which threatens to undo the success of the titling program in the long run. We exploit a natural experiment provided by the elimination of a streamlined registration system targeted for the poor residents in Peru to identify how costly and burdensome registration policies can increase de-regularization. Our analysis indicated that the elimination of such a system led to a significant reduction in the probability of registering transactions, including those that involved a change in ownership. Overall, our findings stress the necessity of building specific components aimed at maintaining properties formal into the design of urban titling programs.
    Keywords: titling programs, registration, property transactions, property rights, natural experiment, Peru
    JEL: P14 O18 R20 R28 K0
    Date: 2016–09
  7. By: Mikhail Antonov (National Research University Higher School of Economics)
    Abstract: This paper analyses the cultural constraints that are factually imposed on the actors of the Russian legal system by the prevailing social philosophy which is characterized by a significant degree of religious conservatism. This conservatism is predictably opposed to sexual minorities and to those who want to defend or justify them. Examining the 2013 amendments on the protection of traditional values and the case law concerning these amendments, along with the discourses of some judges of the Russian Constitutional Court (RCC) and other actors, the author concludes that religious conceptions have a strong impact on decision-making in Russian courts, and can sometimes overrule the formal provisions of the Russian Constitution and the laws which grant protection and guarantees to the sexual minorities. This situation can be explained with reference to the prevailing social philosophy which promotes conservative values and emphasises collective interests. The reasons for this specific development of Russian intellectual culture in this regard fall outside the scope of the present paper, but it can be asserted that this development, historically oriented at prioritizing morals and religion over the law, still shapes the general conservative attitudes of Russians toward sexual minorities. These attitudes cannot be ignored by judges and other actors of Russian legal system who, to some extent, are subject to the general perception of what is just, acceptable, and reasonable in the society.
    Keywords: religion, social philosophy, religious feelings, sexual minorities, justice, courts, case law, legal normativity, human rights, constitutional justice
    JEL: K K
    Date: 2017
  8. By: Dix-Carneiro, Rafael; Soares, Rodrigo R.; Ulysse, Gabriel
    Abstract: This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.
    JEL: J6 K42 F16
    Date: 2017
  9. By: Fausto de Assis Ribeiro
    Abstract: This paper employs the Advocacy Coalition Framework (ACF) as a model to understand the legislative process that led to the implementation of plea bargaining as an anticorruption tool in Brazil. Through the analysis of primary qualitative data, it assesses the political and social forces that formed a coalition and propelled this legislative process forward, thus allowing the posterior emergence of the largest anticorruption judicial action in the history of Brazil. In doing so, it elucidates the reasons that led a systemically corrupt legislative to enact a remarkably effective anticorruption policy, often to the detriment of lawmakers themselves. This paper’s contribution to the literature about the anticorruption framework in Brazil lies in its critical interpretation of the interplay of political forces involved in the early stages of policy formulation. It adds empirical elements to a modern institutional approach to the study of corruption, which derives from classical theories about the formation of Brazilian society. Finally, the paper serves as an illustration of the difficulties inherent to applying the ACF in dysfunctional contexts, such as those marked by systemic corruption.
    Keywords: plea bargaining, corruption, Lava Jato, Advocacy Coalition Framework
    Date: 2017–02–23
  10. By: Hanke, Philip; Philip, Hanke; Klaus, Heine
    Abstract: This paper analyzes the competition between jurisdictions for the relocation of firms and its implications for the various national and international subsidy control regimes (state aid control). We model the attraction of firms to jurisdictions through subsidies as a race with continuous investment over time, where local governments exert inefficiently high efforts, which increase with the number of competitors and their respective spending. This setting makes the case for better investment and subsidy controls by higher-level governments while emphasizing structural problems of implementation at the same time.
    JEL: H71 K21 L50
    Date: 2016
  11. By: Bernardo Guimaraes (Sao Paulo School of Economics); Kevin D. Sheedy (Economics Department London School of Economics (LSE); Centre for Macroeconomics (CFM))
    Abstract: This paper presents a theory of political specialization in which some countries uphold the rule of law while others consciously choose not to do so, even though they are ex ante identical. This is borne out of two key insights: for incumbents in each country, (i) the first steps to the rule of law have the greatest private cost, and (ii) steps taken by some countries in the direction of the rule of law make it less attractive for others to follow the same path. The world equilibrium features a symbiotic relationship between despotic and rule-of-law economies: by producing technology-intensive goods that require protection of property rights, rule-of-law economies raise the relative price of natural resources and increase incentives for despotism in other countries; while the choice of despotism entails a positive externality because cheap oil makes the rule of law more attractive elsewhere in the world.
    Keywords: Rule of Law, Power Sharing, International Trade, Resource Curse, Development
    JEL: D74 F43 O43 P48
    Date: 2017–02
  12. By: Antelo, Manel; Antonio, Sampayo
    Abstract: This paper examines the licensing of an innovation—by a patent holder to one or more users—when the innovation’s value (high or low) is known, after the contract is signed, by each user. In this setup, we analyze the patent holder’s joint decision concerning the number of licenses and the type of contracts. Our first main finding is that, depending on how uncertain is the efficiency of users exploiting the innovation, both shut-down contracts and screening contracts can emerge in equilibrium. Second, shut-down contracts amount to fixed fees under exclusive licensing but are two-part contracts under non-exclusive licensing. Third, there is distorted production at the bottom of the innovation value’s distribution under exclusive licensing as well as distortion at both the bottom and the top of that distribution under non-exclusive licensing. Fourth, asymmetric information favors the latter (i.e., issuing multiple licenses) except when the patent holder uses a screening contract, since then the need to distort production at both the bottom and the top renders non-exclusive licensing less profitable. Our final result is that the number of licenses issued by the patent holder is more likely to maximize aggregate surplus under asymmetric information than under symmetric information.
    Keywords: exclusive and non-exclusive licensing, symmetric and asymmetric information, screening, fixed-fee and two-part contracts, welfare analysis
    JEL: D43 D82 L24
    Date: 2017–03–02
  13. By: Ling Li (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Perry Singleton (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244)
    Abstract: The Occupation Safety and Health Administration enforces safety regulations through workplace inspections. To identify the effect of inspections on worker safety, this study exploits quasi-experimental variation in inspections due to OSHA’s Site Specific Targeting plan. The SST plan used establishment-level data on accidents and injuries to target establishments for inspection. The primary inspection list consisted of establishments with case rates exceeding a cutoff. This cutoff generated a discontinuous increase in inspections, which is used to identify the effect of inspections on worker safety. Using the fuzzy regression discontinuity design and local linear regression, the estimated effect of an inspection on cases involving days away from work, job restrictions, and job transfers is -1.607 per 100 full-time equivalent workers. The effect is most pronounced among manufacturing establishments below the 90th percentile of the case-rate distribution.
    Keywords: OSHA; Worker Safety; Regression Discontinuity
    JEL: J28 K32
    Date: 2017–02
  14. By: Amuedo-Dorantes, Catalina; Arenas-Arroy, Esther
    Abstract: This paper exploits the temporal and geographic variation in the implementation of local and state immigration enforcement measures to identify their impact on undocumented immigrants’ fertility. Using data from the 2005 through 2014 American Community Survey, we find that a one standard deviation increase in the intensity of immigration enforcement lowers the childbearing likelihood of likely undocumented women by 6.3 percent. This effect appears driven by police-based measures and, the fact that is present among intact families, families headed by a likely undocumented couple, as well as among the poorest families, suggests the importance of limited income resources, along with increased uncertainty emanating from an intensified fear of deportation, on likely unauthorized women’s fertility. Given immigrants’ critical contribution to the sustainability of the welfare state and the spread-out embracement of a piece-meal approach to immigration enforcement, further exploration of this impact is warranted and recommended.
    Keywords: Fertility,Immigration Enforcement,Undocumented Immigration,United States
    JEL: J13 J15 K37
    Date: 2017

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