nep-law New Economics Papers
on Law and Economics
Issue of 2020‒03‒23
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Legal standards and economic analysis in antitrust enforcement: an empirical investigation for the case of Greece By Benetatou, Kelly; Katsoulacos, Yannis
  2. Punishment and Crime: The Impact of Felony Conviction on Criminal Activity By Osborne Jackson
  3. Religion, Politics, and Judicial Independence: Theory and Evidence By Sultan Mehmood; Avner Seror
  4. Cigarette Taxes and Teen Marijuana Use By Anderson, D. Mark; Matsuzawa, Kyutaro; Sabia, Joseph J.
  5. The Impact of Felony Larceny Thresholds on Crime in New England By Osborne Jackson; Riley Sullivan
  6. How do U.S. Visa Policies Affect Unauthorized Immigration? By Brian K. Kovak; Rebecca Lessem
  7. Prices and Federal Policies in Opioid Markets By Casey B. Mulligan
  8. Is the WTO dispute settlement procedure fair to developing countries? By Bouët, Antoine; Metivier, Jeanne; Parent, Marie
  9. The Dependent Coverage Mandate Took a Bite Out of Crime By Fone, Zachary S.; Friedson, Andrew I.; Lipton, Brandy; Sabia, Joseph J.
  10. Mortgage-related bank penalties and systemic risk among U.S. banks By Vaclav Broza; Evzen Kocenda
  11. Intended and Unintended Effects of Banning Menthol Cigarettes By Christopher Carpenter; Hai V. Nguyen
  12. A Welfare Analysis of Occupational Licensing in U.S. States By Morris M. Kleiner; Evan J. Soltas
  13. Discriminatory Laws Against Women : A Survey of the Literature By Roy,Sanchari
  14. What Determines Consumer Financial Distress? Place- and Person-Based Factors By Benjamin J. Keys; Neale Mahoney; Hanbin Yang

  1. By: Benetatou, Kelly; Katsoulacos, Yannis
    Abstract: The purpose of this paper is to explain the choice of legal standards of the Hellenic Competition Authority (HCC) concerning antitrust enforcement and the impact of this on the judicial review of the decisions reached. This paper is based on the methodology presented in a paper by Katsoulacos Y., S. Avdasheva, and S. Golovaneva (2019), which measures empirically the extent of economic analysis used and the legal standards (LSs) adopted by Competition Authorities (CAs). The methodology is applied to the appealed investigations of the HCC. In contrast to the theoretical analyses, systematic empirical assessments of LSs have been very limited. There are case studies based on particular decisions or meta-analysis of a group of decisions, but there is no statistical representation of the legal standards applied by competition authorities. The absence of empirical measurement and statistics on legal standards limits our ability to answer important questions. Thus, it makes any international comparisons of LSs applied in different jurisdictions and judgments on the role of economic analysis speculative. Further, it impedes the analysis of the evolution of LSs over time and explaining the factors that drive this evolution. Both issues are important for the identification of the deviation of legal standards actually applied in competition cases from their optimal level. For the purposes of this paper we collected and analysed a dataset of antitrust infringement decisions reached by the HCC, between 1997-2017, which were appealed to Courts for annulment. Our main objectives have been to use this dataset to examine to what extent economic analysis and evidence is used in the decisions of the HCC and how it evolves over time. Also, we examine how changes in the extent of economic analysis or variations in LSs, for any given conduct, is related to (how it affects) the probability that decisions on that conduct are annulled in appellate courts, as well as the effect of movements in LSs – from per se toward effects-based – on litigation costs and the duration of litigation. We show that on average, economic analysis still plays a very modest role in the investigations, as HCC applies close to per se legal standards even when assessing conducts for which effects-based LSs would be more suitable. There is no discernible evolution toward a more effect-based approach during the period 1995-2017. Further, the choice of LSs for specific conducts can create considerable legal uncertainty for firms about how these conducts will be assessed by the HCC. Overall, our empirical findings indicate low quality of enforcement. Our results are consistent with recent arguments, according to which, the higher disputability of decisions as a result of increasing the extent of economic analysis under effects-based LSs, increases the annulment rates of decisions under appeal.
    Keywords: competition policy; legal standards; Greece
    JEL: F3 G3 N0
    Date: 2020–01–01
  2. By: Osborne Jackson
    Abstract: This paper uses increases in felony larceny thresholds as a negative shock to felony conviction probability to examine the impact of punishment severity on criminal behavior. In the theft value distribution between old and new larceny thresholds (“response region”), higher thresholds cause a 2 percent increase in the average larceny value within 120 days of enactment. However, within five years of enactment, response region average larceny values and rates decline 2 percent and 13 percent, respectively, in low-wage areas. Thus, under certain market conditions, smaller expected penalties may reduce incentives and deter crime in the long run.
    Keywords: felony conviction; larceny thresholds; crime; theft; labor supply
    JEL: K14 K42 J22
    Date: 2019–10–01
  3. By: Sultan Mehmood (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Avner Seror (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Most enlightenment philosophers argued that the separation between Church and State would prevent capture of resources by one state religion. We formalize and test a theory that addresses a different danger. We demonstrate that a reduction in the separation between Church and State can be corrosive to political institutions, especially the Judiciary. We show that religious leaders use their high legitimacy to gain political office, and become particularly abusive politicians, misusing their political authority to undermine the independence of the Judiciary. We provide a theoretical framework and estimate the structural equations of our theory using data from Pakistan. Our empirical strategy exploits the plausibly exogenous timing of a military coup to provide causal evidence for the key predictions of our theory.
    Keywords: Religion,Judicial independence,Elections,Economic development
    Date: 2020–02–13
  4. By: Anderson, D. Mark (Montana State University); Matsuzawa, Kyutaro (San Diego State University); Sabia, Joseph J. (San Diego State University)
    Abstract: The spillover effect of cigarette taxes on youth marijuana use has been the subject of intense public debate. Opponents of cigarette taxes warn that tax hikes will cause youths to substitute toward marijuana. On the other hand, public health experts often claim that because tobacco is a "gateway" drug, higher cigarette taxes will deter youth marijuana use. Using data from the National and State Youth Risk Behavior Surveys (YRBS) for the period 1991-2017, we explore the relationship between state excise taxes on cigarettes and teen marijuana use. In general, our results fail to support either of the above hypotheses. Rather, we find little evidence to suggest that teen marijuana use is sensitive to changes in the state cigarette tax. This null result holds for the sample period where cigarette taxes are observed to have the largest effect on teen cigarette use and across a number of demographic groups in the data. Finally, we find preliminary evidence that the recent adoption of state e-cigarette taxes is associated with a reduction in youth marijuana use.
    Keywords: cigarette taxes, teen marijuana use, e-cigarette taxes, youth risky behavior
    JEL: I12 I18 K42
    Date: 2020–02
  5. By: Osborne Jackson; Riley Sullivan
    Abstract: Criminal justice reform has been a high-priority policy area in New England and the nation in recent years. States are generally seeking legislation that would help reintegrate ex-offenders into society while still prioritizing the welfare of all members of the public and the achievement of fiscal goals. The research findings presented in this report indicate that raising felony larceny thresholds—that is, increasing the dollar value of stolen property at or above which a larceny offense may be charged in court as a felony rather than a misdemeanor, a policy adopted by three New England states over the last decade—seems to balance these objectives. Policymakers interested in criminal justice reform should consider incorporating felony larceny threshold increases into the suite of policy changes implementing such reform.
    Keywords: labor supply; felony conviction; larceny thresholds; crime; theft
    Date: 2020–03–01
  6. By: Brian K. Kovak; Rebecca Lessem
    Abstract: We examine how increasing the number of visas available to potential migrants would affect unauthorized immigration from Mexico to the U.S. Current U.S. policy bans people who are deported from receiving legal status for a period of time. This policy aims to serve as an additional deterrent to unauthorized immigration, but may be ineffective given that most potential Mexican migrants have an extremely low probability of ever being able to legally move to the U.S. We develop a dynamic discrete location choice model, which we estimate using data from the Mexican Migration Project, and consider various counterfactual policies that vary the intensity of enforcement and access to work visas. We find that legal entry bans for deported individuals are ineffective at current rates of legal immigration, but that increased legalization rates would amplify the deterrent effects of deportation. We also show that a temporary work visa program would yield similar deterrent effects as an increase in permanent legalization without resulting in very large increases in the total stock of migrants residing in the U.S. These findings have important implications for structuring future immigration reforms.
    JEL: F22 J61
    Date: 2020–02
  7. By: Casey B. Mulligan
    Abstract: More than a dozen Federal policy changes since the year 2000 have affected incentives to prescribe, manufacture, and purchase both prescription and illicitly-manufactured opioids. To the extent that one of the policies, the 2013 “Holder memo,” had a meaningful effect on the cost structure of suppliers of heroin and illicit fentanyl, standard consumer theory predicts that the trend for opioid-involved fatalities would proceed in distinct phases. Prior to 2013, subsidies to, and conveniences for, prescribers and consumers would increase total opioid consumption by reducing the full price of Rx. More surprising is that, with heroin relatively cheap of late, any Rx opioid policy could – and likely does – have the opposite total-consumption effect after 2013 than it would before, especially when the more expensive Rx opioid products are most affected. Subsidies to benzodiazepines (an opioid complement) increase opioid consumption in both phases. While policy changes at first reduced the full price of Rx, and then later increased it, technological change in illicit markets is also a relevant factor over the longer term.
    JEL: H22 I18 K42 L51
    Date: 2020–02
  8. By: Bouët, Antoine; Metivier, Jeanne; Parent, Marie
    Abstract: The World Trade Organization’s Dispute Settlement Procedure has been described as the “crown jewel†of the multilateral trading system, having been highly effective in settling a large number of disputes-without it, the results might have been much worse. Any WTO member can file a complaint against a trade practice of another member that it believes to be in violation of WTO agreements. The Dispute Settlement body then makes a ruling on the dispute. Finally, if the respondent is found guilty by the Dispute Settlement body, the respondent may either bring its practices into compliance or face authorized retaliatory trade measures by the complainant. But is the Dispute Settlement Procedure fair to developing countries, or is there some bias in favor of powerful countries? If potential retaliatory measures by a WTO member are unthreatening to a potential offender, then does the potential offender ignore rules? Do other factors, such as political power, bias which members benefit from the Dispute Settlement Procedure? One approach to investigate potential bias looks at the final outcomes of disputes, asking: do developed countries tend to ignore the Dispute Settlement body’s recommendations when facing complaints from developing countries? Investigations with this approach have found some empirical evidence of bias against developing countries, but samples of disputes are small. Another approach to investigate bias looks at Dispute Settlement body rulings, asking: does the WTO’s panel of experts tend to rule against developing countries? An investigation found that threat of retaliatory measures and asymmetric power did not bias rulings, but that countries with better legal capacity - usually more developed countries - were more likely to win disputes. We take a different approach, looking at which members file complaints to ask: given that members may not even file complaints if they expect to lose, do developing countries avoid filing complaints because they lack power?
    Keywords: World Trade Organization (WTO), trade, international agreements, trade policies, Dispute Settlement Procedure,
    Date: 2019
  9. By: Fone, Zachary S. (University of New Hampshire); Friedson, Andrew I. (University of Colorado Denver); Lipton, Brandy (San Diego State University); Sabia, Joseph J. (San Diego State University)
    Abstract: The Affordable Care Act's Dependent Coverage Mandate (DCM) induced approximately two million young adults to join parental employer-sponsored health insurance (ESI) plans. This study is the first to explore the impact of the DCM on criminal arrests, a potentially important externality. Using data from the National Incident-Based Reporting System, we find that the DCM induced an 11 percent reduction in criminal incidents involving arrestees ages 19 to 25, driven by property crime declines. An examination of the underlying mechanisms suggests that declines in large out-of-pocket expenditures for health care, increased educational attainment, and increases in parent-adult child cohabitation may explain these crime declines. Back-of-the-envelope calculations suggest that the DCM generated approximately $3.1 billion in annual social benefits from crime reduction.
    Keywords: Affordable Care Act, Dependent Coverage Mandate, crime, arrests
    JEL: I13 I18 K14
    Date: 2020–02
  10. By: Vaclav Broza (Institute of Economic Studies, Charles University); Evzen Kocenda
    Abstract: We analyze link between mortgage-related regulatory penalties levied on banks and the level of systemic risk in the U.S. banking industry. We employ a frequency decomposition of volatility spillovers to draw conclusions about system-wide risk transmission with short-, medium-, and long-term dynamics. We find that after the possibility of a penalty is first announced to the public, long-term systemic risk among banks tends to increase. Short- and medium-term risk marginally declines. In contrast, a settlement with regulatory authorities leads to a decrease in the long-term systemic risk. Our analysis is robust with respect to several criteria.
    Keywords: bank, financial stability, global financial crisis, mortgage, penalty, systemic risk
    JEL: C14 C58 G14 G21 G28 K41
    Date: 2020–03
  11. By: Christopher Carpenter; Hai V. Nguyen
    Abstract: Bans on menthol cigarettes have been recommended by the World Health Organization, adopted throughout the European Union, and proposed by the United States Food and Drug Administration (FDA), primarily due to concerns that menthol cigarettes enable youth smoking. Yet there is almost no direct evidence on their effects using real-world policy variation. We provide the first comprehensive evaluation of this policy by studying Canada where seven provinces banned menthol cigarettes prior to a nationwide menthol ban in 2018. Using provincial sales data, we show that menthol cigarette sales fell to zero immediately after menthol bans, with no meaningful effect on non-menthol sales. Survey data confirm that provincial menthol bans significantly reduced menthol cigarette smoking among both youths and adults. We also find strong evidence of substitution, however: provincial menthol bans significantly increased non-menthol cigarette smoking among youths, resulting in no overall net change in youth smoking rates. We also document evidence of evasion: provincial menthol bans shifted smokers’ cigarette purchases away from grocery stores and gas stations to First Nations reserves (where the menthol bans do not bind). Our results demonstrate the importance of accounting for substitution and evasion responses in the design of stricter tobacco regulations.
    JEL: I1
    Date: 2020–02
  12. By: Morris M. Kleiner (National Bureau of Economic Research); Evan J. Soltas
    Abstract: We assess the welfare consequences of occupational licensing for workers and consumers. We estimate a model of labor market equilibrium in which licensing restricts labor supply but also affects labor demand via worker quality and selection. On the margin of occupations licensed differently between U.S. states, we find that licensing raises wages and hours but reduces employment. We estimate an average welfare loss of 12 percent of occupational surplus. Workers and consumers respectively bear 70 and 30 percent of the incidence. Higher willingness to pay offsets 80 percent of higher prices for consumers, and higher wages compensate workers for 60 percent of the cost of mandated investment in occupation-specific human capital.
    Keywords: Occupational licensing; Labor supply; Human capital; Welfare analysis
    JEL: D61 J24 J38 J44 K31
    Date: 2019–10–15
  13. By: Roy,Sanchari
    Abstract: This paper reviews the empirical literature on the existence and impact of gender discriminatory laws on women's outcomes across various domains (categories) that constitute the Women in Business and the Law measure of gender inequality. The evidence to date suggests that there are significant negative consequences of legal gender discrimination on women's outcomes. However, there is considerable variation in the depth of the literature across different domains. In addition, a significant share of the evidence for certain domains is drawn from developed countries, which raises questions about its relevance for developing countries. The literature also highlights some potential unintended consequences of well-intended policy interventions to address legal gender discrimination in certain domains. The paper concludes with a discussion of the various theories relating women's legal rights to their outcomes.
    Keywords: Gender and Development,Labor Management and Relations,Human Rights,Labor Markets
    Date: 2019–01–28
  14. By: Benjamin J. Keys; Neale Mahoney; Hanbin Yang
    Abstract: We use credit report data for a representative sample of 35 million individuals over 2000-2016 to examine consumer financial distress in the United States. We show there are large, persistent geographic disparities in consumer financial distress, with low levels in the Upper Midwest and high levels in the Deep South. To better understand these patterns, we conduct a "movers" analysis that examines how financial distress evolves when people move to places with different levels of financial distress. For collections and default, there is only weakly convergence following a move, suggesting these types of financial distress are not primarily caused by place-based factors (such as local economic conditions, loan supply, and state laws) but instead reflect person-based characteristics (such as financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence the bankruptcy filing decision. Individual characteristics determine whether you get into financial distress, while place-based factors determine whether you use bankruptcy to get out.
    JEL: K35
    Date: 2020–02

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