nep-law New Economics Papers
on Law and Economics
Issue of 2020‒02‒17
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Law enforcement, social control and organized crime. Evidence from local government dismissals in Italy By Cingano, Federico; Tonello, Marco
  2. International Jurisdiction over Standard-Essential Patents By Horn, Henrik
  4. Credence goods in the literature: What the past fifteen years have taught us about fraud, incentives, and the role of institutions By Loukas Balafoutas; Rudolf Kerschbamer
  5. Advance Layoff Notices and Labor Market Forecasting By Pawel Krolikowski; Kurt Graden Lunsford
  6. The Impact of a Minimum Wage Change on the Distribution of Wages and Household Income By Redmond, Paul; Doorley, Karina; McGuinness, Seamus
  7. Case Analysis: Enron; Ethics, Social Responsibility, and Ethical Accounting as Inferior Goods? By Rashid, Muhammad Mustafa
  8. Income Levels, Governance and Inclusive Human Development in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  9. Gender Promotion Gaps: Career Aspirations and Workplace Discrimination By Azmat, Ghazala; Cuñat, Vicente; Henry, Emeric
  10. The Promise and Pitfalls of Conflict Prediction: Evidence from Colombia and Indonesia By Samuel Bazzi; Robert A. Blair; Christopher Blattman; Oeindrila Dube; Matthew Gudgeon; Richard Peck

  1. By: Cingano, Federico; Tonello, Marco
    Abstract: Local governments suspected of Mafia infiltration can be dismissed in Italy through an administrative act not increasing formal deterrence but potentially signaling improved law enforcement among local communities. This paper finds that dismissals are associated to a persistent fall of petty crimes (e.g. thefts) but have no consequences on offenses more closely related to the activity of organized crime, as homicide, extortion, drug-trafficking or usury. Petty crimes are estimated to fall by around 10%, on average, a result that seems driven by the perception of enhanced deterrence (through media pressure, the signaling role of the policy, and other forms of social control) rather than induced by organized crime itself.
    Keywords: crime,law enforcement,organized crime,social control
    JEL: K14 K42 D73
    Date: 2020
  2. By: Horn, Henrik (Research Institute of Industrial Economics (IFN))
    Abstract: Standards often require the use of patented technologies. Holders of standard-essential patents (SEPs) typically commit to make their patents available on "fair, reasonable and non-discriminatory" (FRAND) terms. National competition authorities increasingly intervene against perceived FRAND violations. But which competition authority should regulate SEPs that affect more than one country? The paper uses a very simple economic framework to assess the impact of three main legal bases for allocating jurisdiction: territoriality, nationality, and cross-border e¤ects. The findings are negative: neither base will implement a jointly efficient outcome, and the relative performance of the bases depends on the particular circumstances at hand.
    Keywords: Standard-essential patents; International jurisdiction; Default rules
    JEL: F15 K21 K33 L40 O38
    Date: 2020–01–07
  3. By: DebabrataBasu
    Abstract: In most Indian cities the urban poor survive by working in the informal sector. Street vending provides job opportunity and means of livelihood to the urban poor but Urban Local Bodies consider it as illegal activity so far. In 2004, first time, Government of India recognizes vendor’s role in local economy after so many litigations and Supreme Court verdict in favour of vendors. National Policy on Urban Street Vendor, 2004 and 2009, Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 are some of the initiatives taken by the Government. Still their status has not been changes as it was prior to 2004. Key Words: Informal Sector, Street Vendors, Social Security, Legal Rights Policy
    Date: 2019–12
  4. By: Loukas Balafoutas; Rudolf Kerschbamer
    Abstract: We review the literature on credence goods since Dulleck and Kerschbamer (Journal of Economic Literature 44(1), 5-42, 2006). We consider various markets for credence goods and briefly discuss evidence on the extent of fraud. We then review theoretical and empirical contributions on the determinants of seller and consumer behavior in markets for credence goods. The topics include informational asymmetries, pro-social motivations and seller characteristics, as well as several features of the market structure and institutional environment (separation of diagnosis and treatment, liability, verifiability, reputational concerns, competition between experts and second opinions). We also describe recent developments in this area of research (such as the role of investing in more precise diagnostic technologies) and offer an outlook on future questions.
    Keywords: Credence Goods, Expert Services, Fraud, Undertreatment, Overtreatment, Overcharging
    JEL: D82 D83 D21 D22 D18 I11 L15
    Date: 2020–01
  5. By: Pawel Krolikowski; Kurt Graden Lunsford
    Abstract: We collect rich establishment-level data about advance layoff notices filed under the Worker Adjustment and Retraining Notification (WARN) Act since January 1990. We present in-sample evidence that the number of workers affected by WARN notices leads state-level initial unemployment insurance claims, changes in the unemployment rate, and changes in private employment. The effects are strongest at the one and two-month horizons. After aggregating state-level information to a national-level “WARN factor” using a dynamic factor model, we find that the factor substantially improves out-of-sample forecasts of changes of manufacturing employment in real time.
    Keywords: WARN act; mass layoffs; plant closings; unemployment; employment; initial UI claims.
    JEL: E27 J65 K31
    Date: 2020–01–31
  6. By: Redmond, Paul (ESRI, Dublin); Doorley, Karina (Economic and Social Research Institute, Dublin); McGuinness, Seamus (Economic and Social Research Institute, Dublin)
    Abstract: We use distributional regression analysis to study the impact of a six percent increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately eight percent and four percent respectively. For young workers, aged under 25, the effects were far greater, with a 24 percent reduction in the ratio of wages in the 90th and 10th percentiles. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.
    Keywords: minimum wage, inequality, wage spillovers, distributional regression
    JEL: J31 J38 K31
    Date: 2020–01
  7. By: Rashid, Muhammad Mustafa
    Abstract: In 2001 soon after the Asian Crises of 1997-1998, the Dotcom Bubble, 9/11, the Enron crises triggered a fraud crisis in Wall Street that impacted the market to the core. Since then scandals such as the Lehman Brothers and WorldCom in 2007-2008 and the Great Recession have surpassed it, Enron still remains one of the most important cases of fraudulent accounting. In 2000’s even though the financial industry had become highly regulated, deregulation of the energy industry allowed companies to place bets on future prices. At the peak of the dotcom bubble Enron was named as a star innovator but when the dotcom bubble burst, Enron’s plan to build high speed internet did not flourish and investors started to realize losses. Furthermore, the financial losses of the operations were hid using the market to market accounting technique instead of book value and using special purpose entities to hide debt. The root cause that was identified as a company with a toxic corporate culture focused on officer compensation rather than social responsibility and hence faulty leadership. Is it possible then that; ethical accounting practices, social responsibility and ethics all become inferior goods as income rises in an ‘irrationally exuberant’ era?
    Keywords: Keywords: Enron (ENE, ENRN), Dotcom Bubble, Accounting Fraud, Deregulation, Speculation, Corporate Culture, Social Responsibility, Government Intervention, Risk Management, Consumer Behavior, Energy Markets
    JEL: G32 H12 K32 K4 M1 M12 M14 M4 N0
    Date: 2020–01–19
  8. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study examines how income-driven governance affects inclusive human development in Sub-Saharan Africa with data for the period 2000-2012. The empirical evidence is based on the Generalised Method of Moments (GMM) and Tobit regressions. Nine bundled and unbundled concepts of governance are used: political (voice & accountability and political stability/no violence), economic (government effectiveness and regulation quality) and institutional (corruption-control and the rule of law) governances. The main finding is that ‘middle income’-driven governance has a higher effect on inclusive human development than ‘low income’-driven governance. Policy implications are discussed in the light of: (i) the contemporary relevance of findings; (ii) the pivotal role of a higher income level in the post-2015 sustainable development agenda; and (iii) inconsistent strands in the literature and in foreign aid policies.
    Keywords: Inclusive development; Income levels; Governance; Africa
    JEL: D31 I10 I32 K40 O55
    Date: 2019–01
  9. By: Azmat, Ghazala (Sciences Po, Paris); Cuñat, Vicente (London School of Economics); Henry, Emeric (CEPR)
    Abstract: Using a nationally representative longitudinal survey of lawyers in the U.S., we document a sizeable gap between men and women in their early aspirations to become law firm partners, despite similar early investments and educational characteristics. This aspiration gap can explain a large part of the gender promotion gap that is observed later. We propose a model to understand the role of aspirations and then empirically test its predictions. We show that aspirations create incentives to exert effort and are correlated with expectations of success and the preference for becoming a partner. We further show that aspirations are affected by early work experiences – facing harassment or demeaning comments early in the career affects long-term promotion outcomes mediated via aspirations. Our research highlights the importance of accounting for, and managing, career aspirations as an early intervention to close gender career gaps.
    Keywords: promotion, aspirations, gender gaps
    JEL: M51 J16 K40 J44
    Date: 2020–01
  10. By: Samuel Bazzi (Boston University); Robert A. Blair (Brown University); Christopher Blattman (University of Chicago); Oeindrila Dube (University of Chicago); Matthew Gudgeon (U.S. Military Academy); Richard Peck (Northwestern University)
    Abstract: Policymakers can take actions to prevent local conflict before it begins, if such violence can be accurately predicted. We examine the two countries with the richest available sub-national data: Colombia and Indonesia. We assemble two decades of finegrained violence data by type, alongside hundreds of annual risk factors. We predict violence one year ahead with a range of machine learning techniques. Models reliably identify persistent, high-violence hot spots. Violence is not simply autoregressive, as detailed histories of disaggregated violence perform best. Rich socio-economic data also substitute well for these histories. Even with such unusually rich data, however, the models poorly predict new outbreaks or escalations of violence. “Best case†scenarios with panel data fall short of workable early-warning systems.
    Keywords: :
    Date: 2019–02

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