nep-law New Economics Papers
on Law and Economics
Issue of 2020‒11‒16
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. What Happens in Criminal Firms after Godfather Management Removal? Judicial Administration and Firms Performance By Calamunci, Francesca M.
  2. Gulags, crime, and elite violence : origins and consequences of the Russian mafia By Lonsky, Jakub
  4. Legal Reforms, Conditional Cash Transfers, and Intimate Partner Violence: Evidence from Mexico By Gustavo J Bobonis; Roberto Castro; Juan S Morales
  5. Drugs on the Web, Crime in the Streets - The Impact of Dark Web Marketplaces on Street Crime By Diego Zambiasi
  6. Bargaining under Threats: The Effect of Joint Custody Laws on Intimate Partner Violence By Fernández-Kranz, Daniel; Nollenberger, Natalia; Roff, Jennifer Louise
  7. Mafia Wears Out Women in Power: Evidence from Italian Municipalities By Anna Laura Baraldi; Giovanni Immordino; Marco Stimolo
  8. COVID and Crime: Analysis of crime dynamics amidst social distancing protocols By Scott, Shelby; Gross, Louis J
  9. Cartel deterrence and manager labor market in US and EU antitrust jurisdictions: theory and experimental data By Miguel A. Fonseca; Ricardo Gonçalves; Joana Pinho; Giovanni Tabacco
  10. Judicial Efficiency and Lending Quality By Vincenzo D'Apice; Franco Fiordelisi; Giovanni W. Puopolo
  11. Police-involved deaths and the impact on homicide rates in the post-Ferguson era: a study of 45 US cities By Lane, Tyler Jeremiah
  12. The German Federal Constitutional Court ruling and the European Central Bank's strategy By Feld, Lars P.; Wieland, Volker
  13. Multi-Layer Profit Sharing and Innovation By Filippo Belloc
  14. Captivating News in Colombia By Aparicio, Juan P.; Jetter, Michael

  1. By: Calamunci, Francesca M.
    Abstract: In this paper, I assess the causal effects of judicial administration on a sample of Italian criminal firms in the period 2004-2016, to shed light on the dynamic path of the firm's performance from pre-seizure to the post-entry judicial administration phase. By using exogenous enforcement law decisions imposed by authorities for each case, I estimate their impact, highlighting the economic consequences of having new legal governance aiming to establish legality and the perpetuation of activities. The results show that there are adverse effects on profitability and efficiency with an increase in the leverage level. The empirical evidence shows how organised crime firms are intrinsically managed by their dark criminal side; removing the criminal ties makes it challenging to maintain profitability and efficiency. Overall, the negative results are due to difficulty in establishing a new economic framework for (ex-criminal) firms in which they are able to operate efficiently and according to market rules.
    Keywords: Organised crime,Enforcement Law,Firm level data,Panel data analysis
    JEL: D22 K42 G38
    Date: 2020
  2. By: Lonsky, Jakub
    Abstract: This paper studies the origins and consequences of the Russian mafia (vory-v-zakone). I web scraped a unique dataset that contains detailed biographies of more than 5,000 mafia leaders operating in 15 countries of the (former) Soviet Union at some point between 1916 and 2017. Using this data, I first show that the Russian mafia originated in the Gulag – the Soviet system of forced labor camps which housed around 18 million prisoners in the 1920s - 1950s period. Second, I document that the distance to the nearest camp is a strong negative predictor of mafia presence in Russia’s communities in the early post-Soviet period. Finally, using an instrumental variable approach which exploits the spatial distribution of the gulags, I examine the effects of mafia presence on local crime and elite violence in mid-1990s Russia. In particular, I show that the communities with mafia presence experienced a dramatic rise in crime driven by turf wars which erupted among rival clans around 1993 and persisted for much of the 1990. Further heterogeneity analysis reveals that mafia presence led to a spike in attacks against businessmen, fellow criminals, as well as law enforcement officers and judges, while politically-motivated violence remained unaffected.
    JEL: K42 N40 P16 P37
    Date: 2020–11–03
  3. By: A. Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: The article provides an analysis of the current state of the procedural legislation of Ukraine in the context of the judicial system reform carried out in 2014-2019. The drastic changes in this direction, which began with the tragic events in the life of Ukraine in 2014, radically reversed the three components of national justice – judicial system, status of judges and legal procedure. The key issue of the judicial reform in Ukraine is the implementation of the principles of the organization and administration of justice, the main of which is the supremacy of the law. The essential principle in terms of the strategic vision of the key results of the judicial reform in Ukraine was the improvement of such principles as political and economic independence of justice. In accordance with constitutional amendments, a reauthorization took place between the High Qualification Commission of Judges of Ukraine and the new constitutional body – the High Council of Justice. The power to review disciplinary cases against all judges, taking decisions on temporary suspension of judges from the justice fall within the competence of the latter. The Higher Qualification Commission of Judges of Ukraine is solely responsible for selection of judges, qualification assessments, holding competitions to fill the vacancy for judges. The second principle of the organization and implementation of the judicial power in Ukraine was the principle of accessibility of justice, which is traditionally viewed as a lack of excessive judicial expenses, lack of judicial corruption, complex judicial procedures and excessive length of the judicial process. The primary change reflected in all procedural codes is the introduction of effective protection of rights the rights of a person. Particular attention is paid to ensuring the activities of the Supreme Court and implementing mechanisms that ensure the unity of law enforcement practice within the framework of a unified cassation proceedings. An important step in the implementation of the justice reform was the reformation of legal institutions related to the judicial system (advocacy, court enforcement action, reform of legal education, etc.).
    Keywords: judicial reform,Supreme Court,judicial procedures,judicial authorities,constitutional reform,procedural codification,Litigations,Procedure law
    Date: 2020–07–02
  4. By: Gustavo J Bobonis; Roberto Castro; Juan S Morales
    Abstract: We study the relationship between divorce law reforms codifying intimate partner violence (IPV) as legal grounds for unilateral divorce, the Oportunidades conditional cash transfer program, and the incidence of IPV in Mexico. Using data from three nationally representative surveys in 2003, 2006, and 2011, we show the legal reforms lead to a 55 percent increase in annual divorce rates, concentrated among couples with a history of violence. Comparing groups of beneficiary and non-beneficiary households within villages, we find that IPV rates converge for these couples in the longer run. Marital selection plays an important role in explaining the long-run relationships.
    Keywords: divorce laws; conditional cash transfer programs; Oportunidades; divorce; intimate partner violence; marital selection
    JEL: J12 J16 K42
    Date: 2020–11–05
  5. By: Diego Zambiasi
    Abstract: The Dark Web has changed the way drugs are traded globally by shifting trade away from the streets and onto the web. In this paper, I study whether the Dark Web has an impact on street crime, a common side effect of traditional drug trade. To identify a causal effect, I use daily data from the US and exploit unexpected shutdowns of large online drug trading platforms. In a regression discontinuity design, I compare crime rates in days after the shutdowns to those immediately preceding them. I find that shutting down Dark Web markets leads to a significant increase in drug trade in the streets. However, the effect is short-lived. In the days immediately following shutdowns, drug-related crimes increase by five to almost ten percent but revert to pre-shutdown levels within ten days. I find no impact of shutdowns of Dark Web marketplaces on thefts, assaults, homicides and prostitution.
    Keywords: Dark web; Darknet markets; Drugs; Crime
    JEL: K42 L13
    Date: 2020–09
  6. By: Fernández-Kranz, Daniel (IE Business School, Madrid); Nollenberger, Natalia (IE University); Roff, Jennifer Louise (Queens College, CUNY)
    Abstract: We study the effect of a policy change that exogenously shifted bargaining power from mothers to fathers on intimate partner violence. We exploit a quasi-natural experiment based on a series of reforms in Spain that shifted the custody decision from being unilaterally determined by the mother to a joint decision, barring evidence of violence. We find that the policy increased the incidence of joint custody in Spain from less than 11% of all divorces to 40% in just five years. Comparing the evolution of intimate partner violence in treated and control regions and using couples without children as an additional comparison group, we find that the policy led to a large and significant decrease in intimate partner violence, with the largest effects among couples in which the mother was more likely to seek sole custody before the policy change. Consistent with this finding, the policy also led to a significant reduction in female partner homicides in treated regions. Finally, we also find evidence of more police reports by victims of intimate partner violence with a significantly higher proportion of these reports ending in dismissals or non-guilty decisions by the specialized courts. We interpret this finding as evidence of strategic behavior by mothers who want to retain sole custody of their children.
    Keywords: intimate partner violence, joint custody, divorce, household bargaining models
    JEL: D13 J12 J13 I12 K36
    Date: 2020–10
  7. By: Anna Laura Baraldi (Università della Campania Luigi Vanvitelli); Giovanni Immordino (Università di Napoli Federico II and CSEF); Marco Stimolo (Università della Campania Luigi Vanvitelli)
    Abstract: We test a neglected implication of women’s higher risk aversion: i.e., organized crime infiltration, increasing the perceived risk of entering politics, can prove more effective in discouraging highly qualified women to run for election compared to men. We constructed a data set based on yearly observations of 1,608 Italian municipalities in the 1985–2016 period. Exploiting the exogenous shock of municipal government dissolution for mafia infiltration, we robustly identify a stronger negative effect of organized crime activity on female politicians than on male.
    Keywords: Gender, Organized crime, Politician’s quality, Municipal government.
    JEL: J16 H70 K42
    Date: 2020–10–28
  8. By: Scott, Shelby; Gross, Louis J
    Abstract: In response to the pandemic in early 2020, cities implemented states of emergency and stay at home orders to reduce virus spread. Changes in social dynamics due to local restrictions impacted human behavior and led to a shift in crime dynamics. We analyze shifts in crime types by comparing crimes before the implementation of stay at home orders and the time period shortly after these orders were put in place across three cities. We find consistent changes across Chicago, Baltimore, and Baton Rouge with significant declines in total crimes during the time period immediately following stay at home orders. The starkest differences occurred in Chicago, but in all three cities the crime types contributing to these declines were related to property crime rather than interpersonal.
    Date: 2020–10–20
  9. By: Miguel A. Fonseca (Department of Economics, University of Exeter and NIPE, Universidade do Minho); Ricardo Gonçalves (Universidade Católica Portuguesa, Católica Porto Business School and CEGE); Joana Pinho (Universidade Católica Portuguesa, Católica Porto Business School and CEGE); Giovanni Tabacco
    Abstract: We explore the consequences to contract design if firm shareholders are intent on their managers engaging in price exing activities under different legal regimes. We show that in fine-only legal regimes, optimal contracts must have a fixed wage. In contrast,in fine-plus-prosecution legal regimes optimal contracts must be high-powered,involving a variable component. We test these predictions in a laboratory experiment. We observe contract choices of firm owners, for a given legal regime, as well as the likelihood of managers forming explicit cartels and coordinating on prices in an indefinitely repeated Bertrand oligopoly, taking contract and legal regime as given. The data show that prosecuting managers leads to lower collusion, but high-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by firm owners, often with collusive intents.
    Keywords: Straight Bonds; cartel formation, antitrust, managerial compensation, experiment.
    JEL: L44 C90 L13 C70
    Date: 2020–10
  10. By: Vincenzo D'Apice (Center for Relationship Banking and Economics (CERBE).); Franco Fiordelisi (Essex Business School.); Giovanni W. Puopolo (Università di Napoli Federico II and CSEF)
    Abstract: We investigate the causal relationship between the efficiency of country’s judicial system and the quality of bank lending, using the enforcing contracts reforms that have been implemented in four European countries as a quasi-natural experiment. We find that improvements of enforcing contracts determine large, significant, and persistent reductions of banks’ non-performing-loans (NPLs). These findings are robust to several difference-in-difference tests and reverse causality concerns. Our results have important policy implications especially at the light of the recent Covid-19 pandemic since they may help the banking system mitigate the virus’ negative financial effects.
    Keywords: Judicial Systems, Non-Performing Loans, Banking Stability.
    JEL: G21 G28
    Date: 2019–11–04
  11. By: Lane, Tyler Jeremiah (Monash University)
    Abstract: This study investigated whether in the post-Ferguson era, homicide rates increased in cities where there was a protested police-involved death. It also tests for evidence of two potential mechanisms. To test for evidence of legal cynicism, effects between homicide and aggravated assault rates are compared; a gap would suggest reduced reporting and community disengagement from police. The moderating influence of state or federal investigation was examined as a potential indicator of de-policing. Using an interrupted time series design, I analysed trends in 45 US cities with a protested police-involved death. Results were combined using a meta-analysis, and meta-regressions were used to test for moderating effects. A funnel plot and Egger’s regression were used to test for bias in event selection. Averaged across all cities, there was an acute and largely sustained increase of 31.6% in the homicide rate, which was significantly larger than the effect in aggravated assaults. Effects were not significantly moderated by state or federal investigations. There was no evidence of bias in event selection. The findings suggest that police-involved deaths can have wider-reaching increases in violence in the communities they are meant to protect.
    Date: 2020–10–24
  12. By: Feld, Lars P.; Wieland, Volker
    Abstract: The ruling of the German Federal Constitutional Court and its call for conducting and communicating proportionality assessments regarding monetary policy have been the subject of some controversy. However, it can also be understood as a way to strengthen the de-facto independence of the European Central Bank. The authors shows how a regular proportionality check could be integrated in the ECB's strategy that is currently undergoing a systematic review. In particular, they propose to include quantitative benchmarks for policy rates and the central bank balance sheet. Deviations from such benchmarks can have benefits in terms of the intended path for inflation while involving costs in terms of risks and side effects that need to be balanced. Practical applications to the euro area are provided
    Keywords: central bank independence,monetary law,monetary institutions,monetary policy strategy,proportionality,policy rules,quantitative easing
    JEL: E52 E58 K10
    Date: 2020
  13. By: Filippo Belloc
    Abstract: In this paper, we measure whether contractual profit sharing (PS) influences firm innovation and, if yes, how. We disentangle PS effects for different and possibly conflicting interest groups within the firm. We exploit the fact that PS schemes rarely cover the workers all together, but more often than not are used at some layer in the corporate hierarchy and not at others. Based on the analysis of a representative sample of Italian rms, the key contribution of the study is to show that the structure of PS plans matters significantly for innovation. While PS for managers is associated with little or no improvement in innovation activity, PS for non-managers spurs the probability of observing innovation by about 5% to 15%. This may reflect different discount factors of employees at different firm layers. We also document how PS effects, particularly for non-managers, change depending on other firm level variables, such as size, unionization, exposure on international markets, the span of managerial control and some characteristics of the workforce. Policy implications are discussed.
    Keywords: profit sharing, innovation, incentive pay, teamwork
    JEL: J33 K31 M52 O31
    Date: 2020–08
  14. By: Aparicio, Juan P. (University of Western Australia); Jetter, Michael (University of Western Australia)
    Abstract: What motivates kidnapping decisions by rebel groups? This paper studies news coverage of a proposed prisoner exchange program (the Acuerdo Humanitario; AH) in connection with FARC (Revolutionary Armed Forces of Colombia) kidnappings in the early 2000s. We propose that AH News nourished the FARC's expectations of such an agreement, thereby altering their actions. Empirically, to circumvent latent endogeneity, we access disasters in countries hosting large numbers of Colombians as exogenous variation crowding out AH News. We find AH News systematically shifted the FARC's attention away from financial kidnappings (hostage-taking for ransom purposes) to political kidnappings (hostages subject to a potential prisoner swap). Neither news slant (articles supporting the AH) nor informational content drive results – rather, an explanation consistent with agenda setting appears most plausible. Further, AH News led to (i) more FARC killings of politicians; (ii) fewer non-kidnapping-related FARC attacks; (iii) more governmental press releases; and (iv) fewer military attacks on the FARC. Overall, AH News shifted the FARC's and the government's conflict strategy towards de-escalation while limiting casualties, at least in the short run.
    Keywords: agenda setting, media, kidnapping, terrorism, FARC
    JEL: D74 L82 K14 N46
    Date: 2020–11

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