nep-law New Economics Papers
on Law and Economics
Issue of 2017‒08‒27
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Regulation of Charlatans in High-Skill Professions By Jonathan B. Berk; Jules H. van Binsbergen
  2. Crime and Violence: Desensitization in Victims to Watching Criminal Events By Rafael Di Tella; Lucia Freira; Ramiro H. Gálvez; Ernesto Schargrodsky; Diego Shalom; Mariano Sigman
  3. A study on environmental infractions for Brazilian municipalities: a spatial dynamic panel approach By Júlia Gallego Ziero Uhr; André Luis Squarize Chagas, Daniel de Abreu Pereira Uhr, Renan Porn Peres
  4. Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism? By Friedrich Schneider
  5. Enforceability of non-complete agreements : When does state stifle productivity? By Anand, Smriti; Hasan, Iftekhar; Sharma, Priyanka; Wang, Haizhi
  6. Measuring institutions during and after colonisation in Senegal (1819-2010) By Maty Konte; Elise Wong Sonne; Johannes W. Fedderke
  7. Collective Action, White Flight, and the Origins of Formal Segregation Laws By Werner Troesken; Randall Walsh
  8. Contractual stability and its relationship with the political process of law-making: An analysis of Peru’s public procurement and the principles of the Agreement on Government Procurement with the World Trade Organization By Zegarra Pinto, José

  1. By: Jonathan B. Berk; Jules H. van Binsbergen
    Abstract: We model a market for a skill that is in short supply and high demand, where the presence of charlatans (professionals who sell a service that they do not deliver on) is an equilibrium outcome. We use this model to evaluate the standards and disclosure requirements that exist in these markets. We show that reducing the number of charlatans through regulation decreases consumer surplus. Although both standards and disclosure drive charlatans out of the market, consumers are worse off because of the resulting reduction in competition amongst producers. Producers, on the other hand, strictly benefit from the regulation, implying that the regulation we observe in these markets likely derives from producer interests. Using these insights, we study the factors that drive the cross-sectional variation in charlatans across professions. Professions with weak trade groups, skills in larger supply, shorter training periods and less informative signals regarding the professional's skill, are more likely to feature charlatans.
    JEL: D11 D18 G18 K2 K22 K23 L51
    Date: 2017–08
  2. By: Rafael Di Tella; Lucia Freira; Ramiro H. Gálvez; Ernesto Schargrodsky; Diego Shalom; Mariano Sigman
    Abstract: We study desensitization to crime in a lab experiment by showing footage of criminal acts to a group of subjects, some of whom have been previously victimized. We measure biological markers of stress and behavioral indices of cognitive control before and after treated participants watch a series of real, crime-related videos (while the control group watches non-crime-related videos). Not previously victimized participants exposed to the treatment video show significant changes in cortisol level, heart rate, and measures of cognitive control. Instead, previously victimized individuals who are exposed to the treatment video show biological markers and cognitive performance comparable to those measured in individuals exposed to the control video. These results suggest a phenomenon of desensitization or habituation of victims to crime exposure.
    JEL: K42
    Date: 2017–08
  3. By: Júlia Gallego Ziero Uhr; André Luis Squarize Chagas, Daniel de Abreu Pereira Uhr, Renan Porn Peres
    Abstract: This paper presents novel evidence for environmental offenses in Brazil. IBAMA’s strategy to deter violations is based on large operations and on decapitalizing offenders to signal its will to monitor and enforce the law. We want to answer the following questions: Do the sanctions applied by IBAMA, especially sanction charges, deter actual and potential offenders? Are there any spatial or temporal patterns affecting violations? We use data on offenses against flora and applied fines for Brazilian municipalities between 1998-2015. We contribute to the existing research by providing evidence for Brazil and by incorporating spatial controls in a dynamic panel approach to explain infractions against the environment. We develop and apply a Spatial LIML estimator that accounts for the endogeneity of sanction charges to estimate our panel models. Results show that there is a pedagogic deterrent effect associated with applied fine values. Sanction charges are important to discourage new offenses.
    Keywords: Environment; Violations; Deterrence; Pedagogic effect; Brazil.
    JEL: K32 K42 C23
    Date: 2017–08–11
  4. By: Friedrich Schneider
    Abstract: This paper has four goals: First, the use of cash as a possible driving factor of the shadow economy is investigated. Second, the use of cash in crime, here especially in corruption, is also econometrically investigated. The influence is somewhat larger than on the shadow economy, but it is certainly not a decisive factor for bribery activities. Some figures about organized crime are also shown; the importance of cash is diminishing. Third, some remarks about terrorism are made and here a cash limit doesn’t prevent terrorism. Fourth, some remarks are made about the restriction or abolishment of cash on civil liberties, with the result that this will extremely limit them. The conclusion of this paper is that cash has a minor influence on the shadow economy, crime and terrorism, but potentially a major influence on civil liberties.
    Keywords: cash, cash limit, shadow economy, crime, corruption, transnational crime organizations, financial proceeds, money laundering, illegal cross-border flows, tax fraud figures.
    Date: 2017–04
  5. By: Anand, Smriti; Hasan, Iftekhar; Sharma, Priyanka; Wang, Haizhi
    Abstract: Non-compete agreements (also known as Covenants Not to Compete or CNCs) are frequently used by many businesses in an attempt to maintain their competitive advantage by safeguarding their human capital and the associated business secrets. Although the choice of whether to include CNCs in employment contracts is made by firms, the real extent of their restrictiveness is determined by the state laws. In this paper, we explore the effect of state level CNC enforceability on firm productivity. We assert that an increase in state level CNC enforceability is detrimental to firm productivity, and this relationship becomes stronger as comparable job opportunities become more concentrated in a firm’s home state. On the other hand, this negative relationship is weakened as employee compensation tends to become more long-term oriented. Results based on hierarchical linear modeling analysis of 21,134 firm-year observations for 3,027 unique firms supported all three hypotheses.
    JEL: J61 K2 O31
    Date: 2017–08–16
  6. By: Maty Konte; Elise Wong Sonne; Johannes W. Fedderke
    Abstract: Most of the widely used indicators of institutions have been criticised for the lack of objectivity in their construction and for their coverage of short time periods, especially for African countries. New objective indicators of de jure property rights, de jure political and civil rights, and de facto political instability over a long time horizon have been recently launched for a number of former African British colonies, using the leximetrics method. This paper proposes comparable indicators of institutions for a former African French colony, Senegal. De jure indicators are coded based on written regulations, laws and constitutions for the period 1819-2010. Our de facto measure of political instability is based on reported events collected from different sources. Data from such a long time horizon provide an opportunity to understand the Senegal's path of development from the early time of the colonisation until today.
    Keywords: Leximetrics, Property rights, Political and civil rights, Political instability
    JEL: K10 N47
    Date: 2017–08
  7. By: Werner Troesken; Randall Walsh
    Abstract: This paper develops and tests a simple model to explain the origins of municipal segregation ordinances. Passed by cities between 1909 and 1917, these ordinances prohibited members of the majority racial group on a given city block from selling or renting property to members of another racial group. Our results suggest that prior to these laws cities had created and sustained residential segregation through private norms and vigilante activity. Only when these private arrangements began to break down during the early 1900s did whites start lobbying municipal governments for segregation ordinances.
    JEL: H1 K11 N32 N92 R14 R31
    Date: 2017–08
  8. By: Zegarra Pinto, José
    Abstract: SECO Working Paper 14/2017 by José Zegarra Pinto & Luwing Peche Loayza, PUCP
    Abstract: This paper develops an analysis of the impacts of the Agreement on Government Procurement (GPA) Principles and Rules on the Peruvian Public Procurement regulation, and Peruvian participation in the process of international standardisation of public procurement through signing different kinds of free trade agreements (FTAs).
    Date: 2017–08–14

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