nep-law New Economics Papers
on Law and Economics
Issue of 2017‒03‒26
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Are Labor Inspections Protecting Workers’ Rights? Adding the Evidence from Size-based Labor Regulations and Fines in Peru By Mariana Viollaz
  2. The impact of rule of laws on the recovery of distressed PPP infrastructure Projects By Kokkaew, Nakhon; Oliveira Cruz, Carlos; Alexander, Derek
  3. Creditor Rights, Claims Enforcement, and Bond Performance in Mergers and Acquisitions By Renneboog, Luc; Szilagyi, Peter; Vansteenkiste, Cara
  4. The Externalities of a Deforestation Control Policy in Infant Health: Evidence from Brazil By Carillo, B.; Branco, D.; Trujillo, J.; Lima, J.;
  5. Joint culpability: The effects of medical marijuana laws on crime By Chu, Yu-Wei Luke; Townsend, Wilbur
  6. When was Coase right? By Bergstrom, Ted
  7. Investor-state dispute settlement: Are arbitrators biased in favor of claimants? By Nunnenkamp, Peter
  8. The Voting Rights of Ex-Felons and Election Outcomes in the United States By Klumpp, Tilman; Mialon, Hugo M.; Williams, Michael A.
  9. Applying Competition Policy to Optimize International Trade Rules By Lee , Hyo-young

  1. By: Mariana Viollaz (CEDLAS - UNLP)
    Abstract: This paper analyzes how changes in the enforcement of labor regulations impact on the compliance rate in a context where the labor rules and the characteristics of the labor inspection system differ by firm size. In addition to the channels analyzed in the existing literature –the deterrence effect of labor inspections and the movement of displaced workers into the informal sector, this paper adds a margin of adjustment not analyzed before: firms can reduce their size to take advantage of lower penalties for violating the labor rules and/or less stringent regulations. I analyze empirically which forces have dominated for workers employed in firms of different size in Peru during 2008-2013. I measure the enforcement of labor regulations as the number of labor inspections per hundred workers at the regional level, and I instrument it using a measure of the arrival cost of labor inspectors to the firms. The findings reveal that the degree of enforcement had little impact on the compliance with labor regulations. The effect of firms reducing their size to enjoy lower fines and/or less stringent regulations was small in magnitude and the direction of the effect was not clear. The general lack of effect of the enforcement measure on the compliance with the labor rules indicates that the labor inspection system is not effective in Peru, either because it is not able to generate the incentives to comply with labor regulations (e.g. because of lack of resources) or because it fails to overcome the consequences of the adjustment process associated to an increase in the compliance level (e.g. displaced workers moving into the informal sector of the economy).
    Date: 2016–12
  2. By: Kokkaew, Nakhon; Oliveira Cruz, Carlos; Alexander, Derek
    Abstract: As Public Private Partnerships (PPPs) around the world gain in popularity as a way to finance needed infrastructure, careful study prior to implementing PPP infrastructure projects becomes more important to avoid distress and cancellation in later stages. Unlike traditional infrastructure projects delivered using public finance, PPP projects usually have complex capital structures and multi-party operational control. These parties typically have differing, even diverging goals, which may conflict when faced with operating difficulty. The sponsors of those distressed PPP projects must then renegotiate their contracts with the host government and lenders if the project is to continue operating. This renegotiation occurs in the shadow of local law concerning security interests, contract rights, insolvency and bankruptcy, as parties calibrate their positions to potential downside outcomes. This paper examines the impact of such laws on the distressed PPP infrastructure projects in Thailand. The paper focuses the study on two main contracts commonly found in PPP projects: one between the sponsors and the host government, and the other between the sponsors and the secured lenders.
    Keywords: KEYWORDS: distressed PPP projects, PPP laws and regulations.
    JEL: G38 H54 P16
    Date: 2015–06–01
  3. By: Renneboog, Luc (Tilburg University, Center For Economic Research); Szilagyi, Peter (Tilburg University, Center For Economic Research); Vansteenkiste, Cara (Tilburg University, Center For Economic Research)
    Abstract: This paper shows that country-level differences in creditor protection affect bond performance around cross-border M&A announcements. Using Eurobonds and a global sample of 1,100 cross-border M&As, we find that the bondholders of bidding firms respond more positively to deals that expose their firm to a jurisdiction with stronger creditor rights and more efficient claims enforcement through courts. Positive creditor protection spillovers are enhanced by now-global jurisdictional cooperation in multinational insolvencies and creditors’ ability to do insolvency arbitrage. The spillover effects we observe are stronger for firms with higher asset risk, longer maturity bonds, and a higher likelihood of financial distress.
    Keywords: bondholder value; cross-border mergers and acquisitions (M&As); creditor rights; legal enforcement; eurobonds
    JEL: G34 G32 G12 G14
    Date: 2017
  4. By: Carillo, B.; Branco, D.; Trujillo, J.; Lima, J.;
    Abstract: The burning of forest releases a wide range of contaminants, some of which are known to be hazardous for health. Traditional estimates of the costs of deforestation rarely incorporate the health effects of pollution generated by deforestation. This paper provides the first estimates of the local externalities of deforestation in infant health. Our approach exploits a conservation policy that generated a sharp drop in deforestation across municipalities in the Brazilian Amazon. The core findings are that deforestation control policy led to reductions in the incidence of very low birth weight and extreme prematurity, especially for boys. Collectively, these findings provide additional justification for controlling deforestation.
    Keywords: Deforestation; Environmental Quality; Conservation Policy; Infant Health; Brazil
    JEL: I12 K32 Q51
    Date: 2017–03
  5. By: Chu, Yu-Wei Luke; Townsend, Wilbur
    Abstract: Most U.S. states have passed medical marijuana laws. In this paper, we study the effects of these laws on violent and property crime. We first estimate models that control for city fixed effects and flexible city-specific time trends. To supplement this regression analysis we use the synthetic control method which can relax the parallel trend assumption and better account for heterogeneous policy effects. Both the regression analysis and the synthetic control method suggest no causal effects of medical marijuana laws on violent or property crime at the national level. We also find no strong effects within individual states, except for in California where the medical marijuana law reduced both violent and property crime by 20%.
    Keywords: Medical Marijuana, Laws,
    Date: 2017
  6. By: Bergstrom, Ted
    Abstract: This paper explores the conditions under which there is "Coasian independence" between the assignment of property right and efficient allocation of resources.
    Keywords: Social and Behavioral Sciences, Coase, Externalitie
    Date: 2017–03–20
  7. By: Nunnenkamp, Peter
    Abstract: Self-interested and biased arbitrators are often held responsible for the legitimacy crisis of investor-state dispute settlement (ISDS). Based on UNCTAD's database on ISDS since the late 1990s, we find no compelling evidence that arbitrators are systematically biased. Many disputes are handled by unbiased tribunals, and state-appointed arbitrators are no less pro-state than investor-appointed arbitrators are pro-claimant. Furthermore, even biased tribunals decide more often in favor of respondent states that in favor of private investors. However, it is harder for developing countries, compared to high-income countries, to fend off claims for compensation, in particular when the presidents of arbitration tribunals are biased in favor of private investors.
    Date: 2017
  8. By: Klumpp, Tilman (University of Alberta, Department of Economics); Mialon, Hugo M. (Emory University); Williams, Michael A. (Competition Economics)
    Abstract: Approximately one in forty adult U.S. citizens has lost their right to vote, either temporarily or permanently, as a result of a felony conviction. Because laws restricting voting by felons and ex-felons disproportionately affect minorities, and minorities tend to vote for Democratic candidates, it has been hypothesized that felony disenfranchisement hurts Democratic candidates in elections, thus helping Republican candidates. We test this hypothesis using variation in felony disenfranchisement laws across U.S. states and over time. During the 2000s, a number of states restored the voting rights of ex-felons. Using difference-in-differences regressions, we estimate the effect of laws reenfranchising ex-felons on the vote shares of major party candidates in elections for seats to the U.S. House of Representatives. We argue that the regression estimates provide an upper bound for the true effect of restoring voting rights to ex-felons on the vote shares of major party candidates. Using this upper bound, no House majority would have been reversed in any year between 1998 and 2012, had all states allowed ex-felons to vote.
    Keywords: Voting rights; election law; felony disenfranchisement; U.S. Congress
    JEL: D72 K19
    Date: 2017–03–14
  9. By: Lee , Hyo-young (Center for International Commerce and Finance, Seoul National University)
    Abstract: This paper delves into the relationship between trade and competition, which has long been a subject largely untouched since the issue had been dropped from the multilateral trade agenda in 2003. The need to incorporate elements of competition policy into international trade rules has long been discussed in the context of making the international trade regime more effective. The issue has gained more attention as state-owned enterprises (SOEs) began to emerge as new influential players in the international market, competing with private enterprises on an unequal footing. A growing number of bilateral trade agreements have included chapters on competition policy, albeit with rules that do not have sufficient binding force for disciplining the business practices of state-owned enterprises. The recently concluded Trans-Pacific Partnership (TPP), however, has introduced innovative rules for disciplining the competitive practices of SOEs by integrating the existing WTO disciplines on subsidies with competition rules. In this article, "competitive neutrality", the fundamental principle underlying the SOE disciplines, is used as a framework of analysis for understanding the new disciplines and obligations in the SOE rules. Several legal issues and challenges are identified that are relevant for applying the new rules in the real world, and implications are derived for future rule-making involving other new trade issues.
    Keywords: Competition Policy; State-owned Enterprises; Subsidies; WTO; TPP
    JEL: K33 L32 L41
    Date: 2017–02–27

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