nep-law New Economics Papers
on Law and Economics
Issue of 2018‒09‒10
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Illegal drugs and public corruption: Crack based evidence from California By Alessandro Flamini; Babak Jahanshahi; Kamiar Mohaddes
  2. Size, Determinants, and Consequences of Corruption in China's Provinces: The MIMIC Approach By Hailin Chen; Friedrich Schneider; Qunli Sun
  3. Evidence from an investigation into collusion and corruption in Quebec By Clark, Robert; Coviello, Decio; Gauthier, Jean-Francois; Shneyerov, Art
  5. Laws and Authority By George J. Mailath; Stephen Morris; Andrew Postlewaite
  6. "Negotiating the algorithm" automation, artificial intelligence and labour protection By De Stefano, Valerio.
  7. Reinventing Legal Education: How Clinical Education is Reforming Law Teaching and Practice in Europe (Introduction) By Alemanno, Alberto; Khadar, Lamin
  8. Corporate Social Responsibility (CSR) as Corporate Governance Model for State Owned Enterprises (SOE) By Davit Maisuradze
  9. Mapping the OECD Government Procurement Taxonomy with International Best Practices: An Implementation to ASEAN Countries By Julien Gourdon
  10. Improving Tax Literacy and Tax Morale of Young Adults By Phillis Alexander; Merima Balavac; Suranjita Mukherjee; Andrew Lymer; David Massey
  11. Tax Morale: Framing and Fairness By Phillis Alexander; Merima Balavac; Suranjita Mukherjee; David Massey
  12. Costly Pretrial Agreements By Anderlini, Luca; Felli, Leonardo; Immordino, Giovanni

  1. By: Alessandro Flamini; Babak Jahanshahi; Kamiar Mohaddes
    Abstract: Do illegal drugs foster public corruption? To estimate the causal effect of drugs on public corruption in California, we adopt the synthetic control method and exploit the fact that crack cocaine markets emerged asynchronously across the United States. We focus on California because crack arrived here in 1981, before reaching any other state. Our results show that public corruption more than tripled in California in the first three years following the arrival of crack cocaine. We argue that this resulted from the particular characteristics of illegal drugs: a large trade-off between profits and law enforcement, due to a cheap technology and rigid demand. Such a trade-off fosters a convergence of interests between criminals and corrupted public officials resulting in a positive causal impact of illegal drugs on corruption.
    Keywords: Public corruption, crack cocaine, synthetic control, illegal drugs, and law enforcement
    JEL: C12 D73 K42
    Date: 2018–09
  2. By: Hailin Chen; Friedrich Schneider; Qunli Sun
    Abstract: This paper uses a multiple indicators and multiple causes (MIMIC) model and estimates the extent of corruption in 30 Chinese provinces from 1995 to 2015. Treating corruption as an unobserved latent variable, the MIMIC results show that both government size and public investment have significant positive effects on corruption, while fiscal decentralization, citizen education level, average public sector wages, intensity of law enforcement, media supervision, political control and FDI all have significant negative effects on corruption. Among them, education level, size of public investment, intensity of law enforcement and political control are the most important determinants of China’s corruption. Additionally, we find that corruption decreases GDP and residents’ income significantly. In the 30 provinces the corruption index shows a negative trend from 1995 to 2015. Comparing the extent of corruption in the eastern, central and western provinces, we also find that the more developed the region, the lower the extent of corruption.
    Keywords: corruption index, determinants and consequences, MIMIC model, China’s provinces
    JEL: D72 D73 H11 H77 K42
    Date: 2018
  3. By: Clark, Robert; Coviello, Decio; Gauthier, Jean-Francois; Shneyerov, Art
    Abstract: We study the impact of an investigation into collusion and corruption to learn about the organization of cartels in public procurement auctions. Our focus is on Montreal’s asphalt industry, where there have been allegations of bid rigging, market segmentation, complementary bidding and bribes to bureaucrats, and where, in 2009, a police investigation was launched. We collect procurement data and use a difference-in-difference approach to compare outcomes before and after the investigation in Montreal and in Quebec City, where there have been no allegations of collusion or corruption. We find that entry and participation increased, and that the price of procurement decreased. We then decompose the price decrease to quantify the importance of two aspects of cartel organization, coordination and entry deterrence, for collusive pricing. We find that the latter explains only a small part of the decrease.
    Keywords: Financial Economics, Political Economy
    Date: 2018–02
  4. By: Katarzyna Banasik (Andrzej Frycz Modrzewski Krakow University)
    Abstract: The subject of the article is the expunction of conviction for fiscal criminal offences and misdemeanours under Polish criminal law. The author starts her article by emphasising the social and legal importance of the expunction of conviction and explains the essence of the institution. She then goes on to present the Fiscal Criminal Code as an independent legal act and elaborates on its connections to the Criminal Code. In the main part of the article, the author analyses the legal basis for the expunction of conviction for fiscal criminal offences and presents an in-depth analysis of the regulations governing the expunction of conviction for fiscal criminal offences. She goes on to examine the issue of absolution of a conviction for fiscal criminal offences and misdemeanours through a Presidential pardon. As a result of the analysis, the author makes assessment of the present state of the law as to the expunction of conviction for fiscal criminal offences and misdemeanours. The author suggests that it is necessary to amend some of the existing regulations and proposes a number of de lege ferenda postulates.
    Keywords: fiscal criminal offences, fiscal criminal code, expunction of conviction, periods of expunction of conviction, fixed penalty notice, pardon
    JEL: K00 K14 K14
    Date: 2018–07
  5. By: George J. Mailath (Department of Economics, University of Pennsylvania); Stephen Morris (Department of Economics, Princeton University); Andrew Postlewaite (University of Pennsylvania)
    Abstract: A law prohibiting a particular behavior does not directly change the payoff to an individual should he engage in the prohibited behavior. Rather, any change in the individual’s payoff, should he engage in the prohibited behavior, is a consequence of changes in other peoples’ behavior. If laws do not directly change payoffs, they are “cheap talk,” and can only affect behavior because people have coordinated beliefs about the effects of the law. Beginning from this point of view, we provide definitions of authority in a variety of problems, and investigate how and when individuals can have, gain, and lose authority.
    Date: 2016–11–08
  6. By: De Stefano, Valerio.
    Abstract: This paper aims at filling some gaps in the mainstream debate on automation, the introduction of new technologies at the workplace and the future of work. This debate has concentrated, so far, on how many jobs will be lost as a consequence of technological innovation. This paper examines instead issues related to the quality of jobs in future labour markets. It addresses the detrimental effects on workers of awarding legal capacity and rights and obligation to robots. It examines the implications of practices such as People Analytics and the use of big data and artificial intelligence to manage the workforce. It stresses on an oft-neglected feature of the contract of employment, namely the fact that it vests the employer with authority and managerial prerogatives over workers. It points out that a vital function of labour law is to limit these authority and prerogatives to protect the human dignity of workers. In light of this, it argues that even if a Universal Basic Income were introduced, the existence of managerial prerogatives would still warrant the existence of labour regulation since this regulation is about much more than protecting workers’ income. It then highlights the benefits of human- rights based approaches to labour regulation to protect workers’ privacy against invasive electronic monitoring. It concludes by highlighting the crucial role of collective regulation and social partners in governing automation and the impact of technology at the workplace. It stresses that collective dismissal regulation and the involvement of workers’ representatives in managing and preventing job losses is crucial and that collective actors should actively participate in the governance of technology-enhanced management systems, to ensure a vital “human- in-command” approach.
    Keywords: 1, 2, 3
    Date: 2018
  7. By: Alemanno, Alberto (HEC Paris - Tax & Law); Khadar, Lamin (New York University (NYU) - NYU School of Law (Paris); HEC Paris; European University Institute, Students; University of California, Berkeley - Berkeley Comparative Equality & Anti-Discrimination Law Study Group)
    Abstract: European legal teaching - historically formalistic, doctrinal, hierarchical, and passive - is coming under increasing pressure to re-imagine itself as pragmatic, policy-aware, and action-oriented. Out of this context, a bottom-up movement of university law clinics appears to be emerging in Europe. Although intellectually indebted to the US model, the European variant reflects legal education and practice in Europe, specifically the multi-layered and multi-genetic legal landscape resulting from the Europeanization and internationalization of national legal systems, the globalization of European legal markets, and the growing demand for civic engagement in view of increasingly powerful supra-national institutions. Through the prism of clinical legal education, Reinventing Legal Education is the first attempt to gather scholarly and systematic reflections on the developments taking place in European legal teaching and practice. This groundbreaking book should be read by anyone interested in how clinical legal education is reinventing legal education in Europe.
    Keywords: Legal Education; Law Reform; Participation; Civic empowerment; Coalitions; Legitimacy; Accountability; Civil society; European Union; Good governance
    JEL: K33
    Date: 2018–05–28
  8. By: Davit Maisuradze (Ilia State University)
    Abstract: It is widely acknowledged that Corporate Social Responsibility is a modern trend among big corporations who are taking responsibility for supporting the environment and improving social wellbeing. Majority of the Big Corporations try to follow this trend and implement Corporate Social Responsibility (CSR) as a corporate governance and business model in their corporate structures and activities. CSR underlines the social role of Corporations and promotes their involvement in improving the working conditions of employees, ensuring safety regulations and improving the environmental protection measures. At the same time, this corporate governance model does not discourage corporations from profitable economic conduct but advocates them to support the community with strengthening the vulnerable groups of society, supporting small businesses, providing trainings, coordinating activities with non-commercial entities, etc. Although, if the CSR is a free choice generally for commercial entities, it becomes somehow ?mandatory? for State Shareholding enterprises. These are enterprises where state is holding all or majority of shares. As these corporations are owned by the state, and therefore, indirectly by the society, corporate social responsibility should be a mandatory corporate governance model for such companies. This will enhance their role in serving public. However, in many countries State Owned Enterprises (SOE) lack transparency and openness which affects their accountability level as well. With low level of transparency, it is difficult to define the social and environmental benefits implemented by the SOE. The aim of this speech will be to highlight the importance of Corporate Social Responsibility for State Owned Enterprises. At the same time, the speech will provide new understanding of CSR, with characterizing CSR as a governance model which includes the transparency, openness and higher accountability of the corporations before community. Emphasizing, that state corporations should serve public not only in a social and environmentally safe way but also in a responsible, open and accountable manner.This speech will be presented as part of the findings of the Scientific Project. This work was supported by Shota Rustaveli National Science Foundation (SRNSF) [Grant Number: #217878; Project Title: Legal Regulation, Challenges and Recommendations for Effective Corporate Governance System in State Shareholding Enterprises]. The speech will be presented by the Head of the Project - Davit Maisuradze.
    Keywords: CSR, SOE, Accountability
    JEL: G38 K20 P12
    Date: 2018–07
  9. By: Julien Gourdon (OECD)
    Abstract: The OECD developed a taxonomy of measures affecting government procurement which provides a classification system for different GP measures, policies and procedures, which can impact cross-border government procurement. This project aims to further assist countries in assessing their procurement regimes by mapping the taxonomy against international good practices. The project maps the taxonomy against both the WTO Government Procurement Agreement and the UNCITRAL Model Law on Public Procurement (2011). It further tests this methodology with data collection in four ASEAN countries (Indonesia, Malaysia, Philippines and Viet Nam).
    Keywords: Asia, Government procurement, Government Procurement Agreement (GPA), international trade, public good, regulation
    JEL: F13 F53 H41 H57 K20 N55
    Date: 2018–09–05
  10. By: Phillis Alexander (Department of Accounting, Finance and Economics, Bournemouth University); Merima Balavac (Univerzitiet u Sarajevu); Suranjita Mukherjee (Department of Accounting, Finance and Economics, Bournemouth University); Andrew Lymer (University of Birmingham); David Massey (University of Central Lancashire)
    Abstract: This research considers socio-demographic influences and the impact enhancements to financial and tax literacy may have on young adults’ tax morale. It also considers the subjects’ perceptions of tax compliance and tax administration. The results show that gender, tax tuition, and employment experience influence tax morale. Most of the 377 students surveyed thought the UK tax system is fair, but complex with personal tax rates that are too high. The majority also believe that a significant number of taxpayers cheat by paying less than they legally owe. The research shows the positive impact of focused tax tuition on university students in raising financial and tax literacy as well as an appreciation for public finance. While the researchers were unable to conclude enhanced literacy resulted in enhanced tax morale in this study, the results nevertheless demonstrated marginal improvements in this regard, thus warranting further research into causation. The researchers make several recommendations for further initiatives and enhancements to existing programmes in taxpayer education focused on young people before they leave school and enter the job market.
    Keywords: Income Tax; Tax Morale; Tax Law; Taxability; Tax Compliance
    JEL: K34
    Date: 2018–08
  11. By: Phillis Alexander (Department of Accounting, Finance and Economics, Bournemouth University); Merima Balavac (Univerzitiet u Sarajevu); Suranjita Mukherjee (Department of Accounting, Finance and Economics, Bournemouth University); David Massey (University of Central Lancashire)
    Abstract: This paper examines to the relationship between the perception of tax fairness and tax morale conditional on the level of financial and tax literacy (FTL). The findings are based on the survey responses of 627 US or UK citizens in either public or private employment. Using factor analysis, the researchers found that there is a systematic variation of the effect of perceived tax fairness conditional on the FTL. Further, the way in which questions are framed is found to be important. For positively framed tax morale questions, the moderating effect of tax fairness is significantly negative for low levels of FTL candidates and improves with literacy. However, in negatively framed tax morale questions, tax morale is improved as one views that the tax system is fair but the impact is significant for higher levels of literacy. This has further policy implications as the ‘framing’ of tax literature could be instrumental in improving the tax morale of taxpayers.
    Keywords: Income Tax; Tax Morale; Tax Law; Taxability; Tax Compliance
    JEL: K34
    Date: 2018–08
  12. By: Anderlini, Luca; Felli, Leonardo; Immordino, Giovanni
    Abstract: Settling a legal dispute involves some costs that the parties have to incur ex-ante, for the pretrial negotiation and possible agreement to become feasible. Even in a full information world, if the distribution of these costs is sufficiently mismatched with the distribution of the parties' bargaining powers, a pretrial agreement may never be reached even though actual Court litigation is overall wasteful. Our results shed light on two key issues. First, a Plaintiff may initiate a law suit even though the parties fully anticipate that it will be settled out of Court. Second, the "likelihood" that a given law suit goes to trial is unaffected by how trial costs are distributed among the litigants. The choice of fee-shifting rule can only affect whether the Plaintiff files a law suit in the first place. It does not affect whether it is settled before trial or litigated in Court.
    Keywords: Costly Negotiations; Court Litigation; Pretrial Agreements
    JEL: C79 D23 D86 K12 K13
    Date: 2018–07

This nep-law issue is ©2018 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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