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on Law and Economics |
| By: | Williams, Jenny (University of Melbourne); Weatherburn, Don (Bureau of Crime Statistics and Research) |
| Abstract: | This research evaluates the impact of electronic monitoring as an alternative to prison on reoffending. Leveraging plausibly exogenous variation in sentencing outcomes generated by quasi- random assignment of judges, we find electronic monitoring reduces reoffending within 24 months by 16 percentage points compared to serving a prison sentence. For offenders who are less than 30, the reduction is 43 percentage points, with sizeable and significant reductions in reoffending persisting for 8 years. Our calculations suggest that criminal justice costs are reduced by around $30,000 for each eligible offender who serves their sentence under electronic monitoring rather than in prison. |
| Keywords: | electronic monitoring, prison, reoffending, crime |
| JEL: | K42 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12122&r=all |
| By: | Francesco D'Acunto; Michael Weber; Jin Xie |
| Abstract: | Direct experience of a peer’s punishment might make non-punished peers reassess the probability and consequences of facing punishment and hence induce a change in their behavior. We test this mechanism in a setting, China, in which we observe the reactions to the same peer’s punishment by listed firms with different incentives to react - state-owned enterprises (SOEs) and non-SOEs. After observing peers punished for wrongdoing in loan guarantees to related parties, SOEs - which are less disciplined by traditional governance mechanisms than non-SOEs - cut their loan guarantees. SOEs whose CEOs have stronger career concerns react more than other SOEs to the same punishment events, a result that systematic differences between SOEs and non-SOEs cannot drive. SOEs react more to events with higher press coverage even if information about all events is publicly available. After peers' punishments, SOEs also increase their board independence, reduce inefficient investment, increase total factor productivity, and experience positive cumulative abnormal returns. The bank debt and investment of related parties that benefited from tunneling drop after listed peers’ punishments. Strategic punishments could be a cost-effective governance mechanism when other forms of governance are ineffective. |
| Keywords: | corporate governance, cultural finance, reputational sanctions, related party transactions, minority shareholders, emerging markets, corporate fraud, government ownership |
| JEL: | D91 D72 G32 K42 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7512&r=all |
| By: | Gérard Mondello (Groupe de Recherche en Droit, Economie et Gestion); Evens Salies (Observatoire français des conjonctures économiques) |
| Abstract: | Summary: This paper extends the basic unilateral accident model to allow for Cournot competition. Two firms compete with production input and prevention as strategic variables under asymmetric capacity constraints. We find that liability regimes exert a crucial influence on the equilibrium price and outputs. Strict liability leads to higher output and higher risk compared to negligence. We also study the conditions under which both regimes converge. Key Words: Tort Law, Strict |
| Keywords: | Tort Law; Strict liability; Negligence Rule; Imperfect competition; Oligopoly; Cournot competition |
| JEL: | D43 L13 L52 K13 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5a1unjmoh881mrfbrlqhebkbba&r=all |
| By: | Crinò, Rosario; Immordino, Giovanni; Piccolo, Salvatore |
| Abstract: | Two countries set their enforcement non-cooperatively to deter native and foreign individuals from committing crime in their territory. Crime is mobile, ex ante (migration) and ex post (fleeing), and criminals hiding abroad after having committed a crime in a country must be extradited back. When extradition is not too costly, countries overinvest in enforcement: insourcing foreign criminals is more costly than paying the extradition cost. When extradition is sufficiently costly, instead, a large enforcement may induce criminals to flee the country whose law they infringed. The fear of paying the extradition cost enables the countries coordinating on the efficient outcome. |
| Keywords: | crime; enforcement; Extradition; Fleeing; migration |
| JEL: | K14 K42 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13424&r=all |
| By: | Williams, Jenny (University of Melbourne); Pacula, Rosalie Liccardo (RAND); Smart, Rosanna (RAND) |
| Abstract: | This paper studies the impact of legal medical marijuana markets on the decision to quit marijuana use. We distinguish between de jure legalization, where dispensaries are legally protected, and de facto legalization, where dispensaries operate in the absence of laws protecting them. Geographic and temporal variation in the presence of de facto and de jure legalized markets serve to identify their impact on quitting. Although we find little robust evidence that quitting by females is impacted by either the presence or protection of retail medical marijuana dispensaries, our results reveal significant and ethnically differentiated responses by males. Minority males are found to delay quitting in response to legal protection of dispensaries, while white males delay quitting in response to operating dispensaries. This behavior is consistent with racial and ethnic differences in the risks of arrest for simple marijuana offences, particularly for black males. |
| Keywords: | medical marijuana laws, duration models, marijuana use |
| JEL: | H75 K42 I18 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12114&r=all |
| By: | Couttenier, Mathieu; Hatte, Sophie; Thoenig, Mathias; Vlachos, Stephanos |
| Abstract: | We study how news coverage of immigrant criminality impacted municipality-level votes in the November 2009 "minaret ban" referendum in Switzerland. The campaign, successfully led by the populist Swiss People's Party, played aggressively on fears of Muslim immigration and linked Islam with terrorism and violence. We combine an exhaustive violent crime detection dataset with detailed information on crime coverage from 12 newspapers. The data allow us to quantify the extent of pre-vote media bias in the coverage of migrant criminality. We then estimate a theory-based voting equation in the cross-section of municipalities. Exploiting random variations in crime occurrences, we find a first-order, positive effect of news coverage on political support for the minaret ban. Counterfactual simulations show that, under a law forbidding newspapers to disclose a perpetrator's nationality, the vote in favor of the ban would have decreased by 5 percentage points (from 57.6% to 52.6%). |
| Keywords: | Immigration; populism; Violent Crimes; Vote |
| JEL: | D72 K42 L82 Z12 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13496&r=all |
| By: | Bindler, Anna; Ketel, Nadine |
| Abstract: | Little is known about the costs of crime to victims and their families. In this paper, we use unique and detailed register data on victimisations and labour market outcomes from the Netherlands to overcome data restrictions previously met in the literature and estimate event-study designs to assess the short- and long-term effects of criminal victimisation. Our results show significant decreases in earnings (6.6-9.3%) and increases in the days of benefit receipt (10.4-14.7%) which are lasting up to eight years after victimisation. We find shorter-lived responses in health expenditure. Additional analyses suggest that the victimisation can be interpreted as an escalation point, potentially triggering subsequent adverse life-events which contribute to its persistent impact. Heterogeneity analyses show that the effects are slightly larger for males regarding earnings and significantly larger for females regarding benefits. These differences appear to be largely (but not completely) driven by different offence characteristics. Lastly, we investigate spill-over effects on non-victimised partners and find evidence for a spill-over effect of violent threat on the partner's earnings. |
| Keywords: | crime; event-study design; labour market outcomes; victimisation |
| JEL: | I1 J01 J12 K4 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13431&r=all |
| By: | Chigavazira, Abraham (University of Melbourne); Fisher, Hayley (University of Sydney); Robinson, Tim (Life Course Centre); Zhu, Anna (University of Melbourne) |
| Abstract: | This paper analyses the effect of extending equitable property division divorce laws to unmarried cohabiting couples in Australia. Using a triple-difference fixed effects approach we show that existing couples are more likely to make relationshipspecific investments after being exposed to laws enabling the equitable redistribution of property in the event of relationship breakdown. In affected couples we find that men increase their employment and women increase time spent on housework. Couples have more children and are more likely to become home owners. These results demonstrate the causal effect of property division laws on relationship-specific investments and inform the ongoing international debate about the appropriate legal treatment of unmarried cohabiting couples. |
| Keywords: | cohabitation, divorce, property, division, household behavior |
| JEL: | J12 K36 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12102&r=all |
| By: | Bonetti, Pietro; Duro, Miguel; Ormazabal, Gaizka |
| Abstract: | This paper examines the effect of disclosure regulation on the market for corporate control. We study the implementation of a recent European regulation imposing tighter disclosure requirements regarding the financial and ownership information provided by public firms. We find a substantial drop in the number of control acquisitions after the implementation of the regulation, a decrease that is concentrated in countries with more dynamic takeover markets. Consistent with the idea that the disclosure requirements increased acquisition costs, we also observe that, under the new disclosure regime, target (acquirer) stock returns around the acquisition announcement are higher (lower), and toeholds are substantially smaller. Overall, our evidence suggests that tighter disclosure requirements can impose significant acquisition costs on bidders and thus slow down the market for corporate control. |
| Keywords: | Acquisitions; Disclosure regulation; market for corporate control; mergers; Proprietary costs; Takeover laws |
| JEL: | G34 G38 K22 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13458&r=all |
| By: | Giebe, Thomas; Lee, Miyu |
| Abstract: | There are legal grounds to hear competitors in merger control proceedings, and competitor involvement has gained significance. To what extent this is economically sensible is our question. The competition authority applies some welfare standard while the competitor cares about its own profit. In general, but not always, this implies a conflict of interest. We formally model this setting with cheap talk signaling games, where hearing the competitor might convey valuable information to the authority, but also serve the competitor's own interests. We find that the authority will mostly have to ignore the competitor but, depending on the authority's own prior information, strictly following the competitor's selfish recommendation will improve the authority's decision. Complementary to our analysis, we provide empirical data of competitor involvement in EU merger cases and give an overview of the legal discussion in the EU and US. |
| Keywords: | merger control, antitrust, European Commission, signaling, efficiency, competitors, rivals, competition |
| JEL: | C73 G34 K21 K4 L13 L2 L4 |
| Date: | 2019–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62428&r=all |
| By: | Ashworth, Jonathan; Goodhart, Charles A |
| Abstract: | The Canadian Government legalized Cannabis usage on October 17th, 2018. During the same month, primarily in the week before and after such legalization, the amount of cash in circulation fell quite materially, in contrast to the rises typically observed in previous years. A key driver is likely to have been Cannabis users switching from cash payments for illegal purchases to using standard recordable electronic payments for their purchases, which have now become legal. The legalization of Cannabis should ultimately reduce the size of the Underground economy by around 4 or 5 percent, with a much bigger decline likely in the black economy. |
| Keywords: | Black Economy; Canada; Cannabis; cash |
| JEL: | D12 E41 K40 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13448&r=all |
| By: | Goodhart, Charles A; Lastra, Rosa M |
| Abstract: | There is widespread concern that the bonus culture for senior managers in limited liability companies is having adverse effects, e.g. on risk-taking, leverage and lower longer-term investment. The moral hazard of limited liability was appreciated in the 19th century, when unlimited or multiple liability, especially for bankers, was widely adopted. Whereas outside, notably retail, investors still need the protection of limited liability, we advocate moving towards a two-tier equity system, primarily for banks, with insiders, senior managers and others with influence over corporate decisions, becoming subject to multiple liability. But the transition costs of doing so suddenly would be great, so our proposal is to start by applying this initially just to Systemically Important Financial Intermediaries. |
| Keywords: | Banking; banks; corporate governance; institutional investors; limited liability; Senior Management Regime; Two Tier Equity |
| JEL: | G30 G32 G39 K20 K22 K29 L14 L20 L21 M14 N20 N21 N23 P10 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13494&r=all |
| By: | Patrick IMAM (International Monetary Fund (IMF)); Roland Kangni KPODAR (International Monetary Fund (IMF)) |
| Abstract: | This paper analyzes the impact of citizenship laws on economic development. We first document the evolution of citizenship laws around the world, highlighting the main features of jus soli, jus sanguinis as well as mixed regimes, and shedding light on the channels through which they could have differentiated impact on economic development. We then compile a data set of citizenship laws around the world. Using cross-country regressions, panel-data techniques, as well as the synthetic control method and subjecting the results to a battery of tests, we find robust evidence that jus soli laws—being more inclusive—lead to higher income levels than alternative citizenship rules in developing countries, though to a less extent in countries with stronger institutional environment. |
| JEL: | P16 K40 F22 O15 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:4675&r=all |
| By: | Ojo, Marianne |
| Abstract: | It appears the United States Senate may have been trying to make the points that renegotiating or enacting new legislations require more energy, efforts and time than many would appreciate – particularly in the processes and attempts involved in dismantling the Affordable Care Act – an attempt which ultimately proved unsuccessful – even though certain key elements were eventually replaced through the Tax Reform Bill which was approved in December 2017 – the first major legislative success of the Trump Administration. However the Affordable Care Act remains a testimony of efforts which had been invested in designing a legislation – which although not the ultimate legislation for some, still partially addresses certain concerns of the medical system. Certain other agreements have not had it so easy during the first twelve months of the new administration. Notably, the Trans Pacific Partnership, the Paris Global Climate Agreement – and even the North American Free Trade Area (still being re negotiated) – which have either been withdrawn from, or face the threat of being withdrawn from. So which alliances appear to have been understated, dismantled or being re considered, during and following the first year marking the inauguration of the 45th President of the United States? |
| Keywords: | Brexit; Trans Pacific Partnership; North American Free Trade Area; African Union; European Union; trade agreements; environmental agreements; Affordable Care Act; Deferred Action for Childhood Arrivals Program |
| JEL: | E3 E31 E32 E4 E44 G2 G28 K23 M4 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84050&r=all |