nep-law New Economics Papers
on Law and Economics
Issue of 2019‒01‒14
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. An economic analysis of court fees: evidence from the Spanish civil jurisdiction By Juan S. Mora-Sanguinetti; Marta Martínez-Matute
  2. Racial Bias and In-group Bias in Judicial Decisions: Evidence from Virtual Reality Courtrooms By Samantha Bielen; Wim Marneffe; Naci H. Mocan
  3. Do State Laws Protecting Older Workers from Discrimination Reduce Age Discrimination in Hiring? Evidence from a Field Experiment By David Neumark; Ian Burn; Patrick Button; Nanneh Chehras
  4. Internet Intermediary Liability under the Internet Governance: Taiwan's Legislative Action By Yeh, Chih-Liang; May, Cheryl Toh Shuet
  5. How Much of Barrier to Entry is Occupational Licensing? By Peter Blair; Bobby Chung
  6. The Unexpected Effects of No Pass, No Drive Policies on High School Education By Kennedy, Kendall
  7. Does Job Security Hamper Employment Prospects? By Bjuggren, Carl Magnus; Skedinger, Per
  8. Bank Leverage, Welfare, and Regulation By Anat R. Admati; Martin F. Hellwig

  1. By: Juan S. Mora-Sanguinetti (Banco de España); Marta Martínez-Matute (Universidad Autónoma de Madrid)
    Abstract: The adoption of court fees has been traditionally justified as a means to improve the performance of enforcement institutions as they may have an effect of deterrence of the dispute. Judicial congestion has clear negative impacts on economic performance. Spain, which has one of the highest rates of litigation of the OECD, has traditionally lacked a general system of court fees. In 2002, the Congress passed a system of court fees to be paid by legal entities and enterprises. In 2012, the fees were extended to individuals and abrogated in 2015. This bounded period of enforcement allows us to empirically test the impacts of court fees on congestion. In order to do this, we collected a comprehensive database of quarterly data on the real workload of civil courts. This study concludes that the effects of court fees, although reduced courts’ congestion, are far from homogeneous and depend on the type of procedure, the workload of the courts and the local macroeconomic conditions
    Keywords: courts fees, judicial efficacy, litigation rates
    JEL: K41 E51 G2
    Date: 2018–12
  2. By: Samantha Bielen; Wim Marneffe; Naci H. Mocan
    Abstract: We shot videos of criminal trials using 3D Virtual Reality (VR) technology, prosecuted by actual prosecutors and defended by actual defense attorneys in an actual courtroom. This is the first paper that utilizes VR technology in a non-computer animated setting, which allows us to replace white defendants in the courtroom with individuals who have Middle Eastern or North African descent in a real-life environment. We alter only the race of the defendants in these trials, holding all activity in the courtroom constant ( Law students, economics students and practicing lawyers are randomly assigned to watch with VR headsets, from the view point of the judge, the trials that differed only in defendants’ skin color. Background information obtained from the evaluators allowed us to identify their cultural heritage. Evaluators made decisions on guilt/innocence in these burglary and assault cases, as well as prison sentence length and fine in accordance with the guidelines provided by the relevant law. There is suggestive evidence of negative in-group bias in conviction decisions where evaluators are harsher against defendants of their own race. There is, however, significant overall racial bias in conviction decisions against minorities. In the sentencing phase, we find in-group favoritism in prison times and fines, driven by white evaluators. This translates into overall racial bias against minority defendants in prison sentences and fines. We find only scant evidence that the concerns of the evaluators about terrorism, about immigration, or their trust in the judiciary or the police have an impact on their judicial decisions, suggesting that the source of the bias may be deep-rooted. Merging a small sample of judges and prosecutors with the sample of lawyers provides very similar results as those obtained from the analysis of lawyers.
    JEL: K4 Z1
    Date: 2018–12
  3. By: David Neumark; Ian Burn; Patrick Button; Nanneh Chehras
    Abstract: We provide evidence from a field experiment in all 50 states on age discrimination in hiring for retail sales jobs. We relate measured age discrimination – the difference in callback rates between old and young applicants – to state variation in anti-discrimination laws protecting older workers. Anti-discrimination laws could boost hiring, although they could have the unintended consequence of deterring hiring if their main effect is to increase termination costs. We find some evidence that there is less discrimination against older men and women in states where age discrimination law allows larger damages, and some evidence that there is lower discrimination against older women in states where disability discrimination law allows larger damages. But this evidence is not robust to all of the estimations we consider. However, we reach a robust conclusion that stronger or broader laws protecting older workers from discrimination do not have the unintended consequence of deterring their hiring.
    JEL: J23 J26 J7 J78 K31
    Date: 2018–12
  4. By: Yeh, Chih-Liang; May, Cheryl Toh Shuet
    Abstract: The Internet intermediary has difficulty to monitor all the information on the website. To solve the issue whether the intermediary should be jointly liable for the direct infringer regarding the infringing content, current Copyright Law has rendered an immunity constructed by the notice-and-takedown rule, which does not extend to the other types of online infringement. Such a cooperative obligation has made the intermediary bear heavy burden to monitor online activities. Some countries provide the mechanism of site blocking to protect the rights of right holders; however, such a measure has been challenged by many sectors of community. Recently Taiwan's government announced the proposal of Digital Communications Act attempting to adopt the multi-stakeholders model of Internet Governance to make a smooth communication and to keep the government from intervene the Internet management by administrative measures. It also helps establish the mechanism of value compensation among right holders, users and intermediaries and maintain the neutral role of intermediary to check balances of various interests. This paper attempts to explore the legal development of Internet intermediary liability, to understand the jurisprudential meaning of the concept of Internet governance, and to review whether current legal remedies are enough or not, especially focusing on whether the site blocking measure can be adopted and how to make balances of interests. This paper makes solid suggestions to correct the flaws of the legislation of Digital Communications Act and argues that the Internet Governance focuses not only on the legitimacy of procedural participation but also on the protection of substantial rights, so as to preserve the sound development of entire Internet.
    Keywords: Internet Governance,Multi-stakeholders Model,Internet Intermediary Liability,Safe Harbors,Site Blocking,Digital Communications Law
    Date: 2018
  5. By: Peter Blair (Clemson University); Bobby Chung (Clemson University)
    Abstract: We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labor supply by an average of 17%-27%. The negative labor supply effects of licensing appear to be strongest for white workers and comparatively weaker for black workers.
    Keywords: occupational licensing, Labor Supply, race, gender
    JEL: J21 K23 L51
    Date: 2018–12
  6. By: Kennedy, Kendall
    Abstract: Since 1988, 27 states have introduced No Pass, No Drive laws, which tie a teenager’s ability to receive and maintain a driver’s license to various school-related outcomes -- most commonly, enrollment and attendance. Truancy-Based No Pass, No Drive policies target only attendance – teens that fail to meet a minimum attendance requirement lose their driver’s license. However, these policies allow students to drop out of school without facing this penalty. These policies increase the annual dropout rate by between 32 and 45 percent (1.4 to 2 percentage points). Enrollment-Based No Pass, No Drive policies, the largest group of policies, which target both enrollment and attendance, have negligible effects on dropout rates, but decrease the Averaged Freshman Graduation Rate (AFGR) by more than one percentage point. However, this lower graduation rate stems from students delaying their dropout decision by up to two years. As a result, these students are retained in the ninth and tenth grades, increasing ninth grade enrollment by 2.8 percent relative to eighth grade enrollment the year prior; this causes an artificial reduction in the graduation rate, rather than a reduction in the true likelihood that a student will graduate.
    Keywords: AFGR, Dropout Rate, Driver's License, Education, No Pass No Drive
    JEL: H75 I28
    Date: 2018–10–15
  7. By: Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)); Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: We investigate the effect of employment protection legislation (EPL) on the propensity to hire workers from unemployment and active labor market programs (ALMPs), utilizing a reform that decreased dismissal costs for small firms only. Using administrative data from Sweden, we find that less stringent EPL increased the share of workers hired from unemployment and some ALMPs. Our results suggest that there was less screening of new hires after the reform, and that liberalization of EPL mitigates the stigma associated with unemployment and participation in ALMPs.
    Keywords: Employment protection; Active labor market programs; Unemployment
    JEL: H80 J60 J64 K31
    Date: 2018–12–06
  8. By: Anat R. Admati (Graduate School of Business, Stanford University); Martin F. Hellwig (Max Planck Institute for Research on Collective Goods)
    Abstract: We take issue with claims that the funding mix of banks, which makes them fragile and crisis-prone, is efficient because it reflects special liquidity benefits of bank debt. Even aside from neglecting the systemic damage to the economy that banks’ distress and default cause, such claims are invalid because banks have multiple small creditors and are unable to commit effectively to their overall funding mix and investment strategy ex ante. The resulting market outcomes under laissez-faire are inefficient and involve excessive borrowing, with default risks that jeopardize the purported liquidity benefits. Contrary to claims in the literature that “equity is expensive” and that regulation requiring more equity in the funding mix entails costs to society, such regulation actually helps create useful commitment for banks to avoid the inefficiently high borrowing that comes under laissez-faire. Effective regulation is beneficial even without considering systemic risk; if such regulation also reduces systemic risk, the benefits are even larger.
    Keywords: Liquidity in banking, leverage in banking, banking regulation, capital structure, capital regulations, agency costs, commitment, contracting, maturity rat race, leverage ratchet effect, Basel
    JEL: D53 D61 G01 G18 G21 G24 G28 G32 G38 H81 K23
    Date: 2018–11

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