nep-law New Economics Papers
on Law and Economics
Issue of 2021‒01‒11
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Replicability in Empirical Legal Research By Chin, Jason; Zeiler, Kathryn
  2. Mental Health Effects of Same-Sex Marriage Legalization By Shuai Chen; Jan van Ours
  3. Do State Tobacco 21 Laws Work? By Calvin Bryan; Benjamin Hansen; Drew McNichols; Joseph J. Sabia
  4. Judge Peer Effects in the Courthouse By Eren, Ozkan; Mocan, Naci
  5. Designing and Negotiating Agreements in a Digitalized Era – a qualitative analysis By Andrén, Daniela; Kellgren, Jan; Kristoffersson, Eleonor
  6. Towards the Effects-based Approach in EU Competition Law: the Assessment of Single Branding Agreements By Hsieh, Chang-Chiang
  7. The Effect of Occupational Licensing Stringency on the Teacher Quality Distribution By Bradley Larsen; Ziao Ju; Adam Kapor; Chuan Yu
  8. Risk Sharing Within and Outside the Firm: The Disparate Effects of Wrongful Discharge Laws on Expected Stock Returns By Mahlstedt, Robert; Weber, Rüdiger
  9. Larceny in the Product Market: A Hidden Tax? By ; Osborne Jackson
  10. The Regulation of Digital Trade By Lillyana Daza Jaller; Simon Gaillard; Martín Molinuevo
  11. Consumer Credit with Over-optimistic Borrowers By Florian Exler; Igor Livshits; James MacGee; Michèle Tertilt
  12. Immigration Policy and the Rise of Self-Employment among Mexican Immigrants By Amuedo-Dorantes, Catalina; Lofstrom, Magnus; Wang, Chunbei
  13. Incentive compatible relationship between ERMII and Close-Cooperation in the Banking Union: The case of Bulgaria and Croatia By María J Nieto; Dalvinder Singh
  14. Gender Wage Gap - A Matching Analysis for Three MENA Countries: Egypt, Jordan and Turkey By Doruk, Ömer Tuğsal; Pastore, Francesco

  1. By: Chin, Jason (University of Sydney); Zeiler, Kathryn (Boston University)
    Abstract: As part of a broader methodological reform movement, scientists are increasingly interested in improving the replicability of their research. Replicability allows others to perform replications to explore potential errors and statistical issues that might call the original results into question. Little attention, however, has been paid to the state of replicability in the field of empirical legal research (ELR). Quality is especially important in this field because empirical legal researchers produce work that is regularly relied upon by courts and other legal bodies. In this review article, we summarize the current state of ELR relative to the broader movement towards replicability in the social sciences. As part of that aim, we summarize recent collective replication efforts in ELR and transparency and replicability guidelines adopted by journals that publish ELR. Based on this review, ELR seems to be lagging other fields in implementing reforms. We conclude with suggestions for reforms that might encourage improved replicability.
    Date: 2021–01–01
  2. By: Shuai Chen (Luxembourg Institute of Socio-Economic Research); Jan van Ours (Erasmus University Rotterdam)
    Abstract: Sexual minorities have had worse than average mental health, which may have to do with actual or perceived discrimination. Same-sex marriage legalization (SSML) is a typical anti-discrimination policy removing marital restrictions for sexual minorities. We study how this legislation affected mental health of sexual minorities in the Netherlands. Conducting a difference-in-differences analysis, we compare changes in mental health following the legalization between sexual minorities and heterosexuals. We find that SSML improved mental health of both married and non-married sexual minorities, which implies that marriage is not the only channel. Examinations of alternative mechanisms combined with literature suggest that the legislation may also take effect by improving societal tolerance as well as stabilizing partnerships and enriching the choice basket of partnership forms for sexual minorities.
    Keywords: Same-sex marriage, Mental health, Sexual minorities
    JEL: I12 I18 J12 J15 K36
    Date: 2021–01–04
  3. By: Calvin Bryan; Benjamin Hansen; Drew McNichols; Joseph J. Sabia
    Abstract: Tobacco 21 (T-21) laws prohibit the sale of tobacco products to individuals under age 21. This study is the first to comprehensively examine the impacts of statewide T-21 laws on youth tobacco consumption, including spillovers to minor teens. Using data from the 2009-2019 Behavioral Risk Factor Surveillance Survey (BRFSS) and a difference-in-differences approach, we find that the enactment of a statewide T-21 law was associated with a 2.5 to 4.0 percentage-point decline in smoking participation among 18-to-20-year-olds. A causal interpretation of our estimates is supported by event-study analyses and falsification tests for young adults ages 21 and older. Next, using data from the 2009-2019 State Youth Risky Behavior Surveys (YRBS), we find that statewide T-21 laws reduced tobacco cigarette and electronic cigarette (e-cigarette) consumption among 18-year-old high school students. We also find that the public health benefits of T-21 laws extend to 16-to-17-year-olds, a group that relies heavily on the “social market” — including 18-year-old peers — to access tobacco. We conclude increasing the minimum legal purchasing age for tobacco to 21 appears to be a more effective current policy strategy to deter youth smoking than raising cigarette taxes.
    JEL: I12 I18 K42
    Date: 2020–12
  4. By: Eren, Ozkan (University of California, Riverside); Mocan, Naci (Louisiana State University)
    Abstract: Although there exists a large literature analyzing whether an individual's peers have an impact on that individual's own behavior and subsequent outcomes, there is paucity of research on whether peers influence a person's decisions and judgments regarding a third party. We investigate whether consequential decisions made by judges are impacted by the gender composition of these judges' peer group. We utilize the universe of decisions on juvenile defendants in each courthouse in Louisiana between 1998 and 2012. Leveraging random assignment of cases to judges, and variations in judge peer composition generated by elections, retirements, deaths and resignations, we show that an increase in the proportion of female peers in the courthouse causes a rise in individual judges' propensity to incarcerate, and an increase in the assigned sentence length. This effect is fully driven by female judges. We also demonstrate that the impact of proportion of female peers is not a proxy for other peer characteristics such as race and age. Further analysis suggests that this behavior of female judges is unlikely to be a reflection of an effort to conform to evolving norms of judicial stringency, measured by peers' harshness in sentencing, but that it is due to the sheer exposure to female colleagues.
    Keywords: peers, judicial, harshness, leniency, sentencing, judge, critical mass, juveniles, crime, court
    JEL: D9 K4
    Date: 2020–12
  5. By: Andrén, Daniela (Örebro University School of Business); Kellgren, Jan (Linköping University); Kristoffersson, Eleonor (Örebro University School of Law, Psychology and Social Work)
    Abstract: Digitalization is a reality that governs more and more both the society and the economy, facilitating new and more efficient ways of setting up business and business collaborations. Rational agreement routines and well thought through contracts help organizations to avoid legal disputes and thus maintain long-term relations with customers and suppliers. Therefore, a digitalized platform where non-lawyers (purchasers, sellers) in a user-friendly interface can draft individual contracts without lawyers is expected to both increase the companies’ labor productivity and to facilitate the evaluation of risks and opportunities over time. To our knowledge, there is very little known about the agreement routines and the firms’ interest of making them more efficient using digital solutions. Based on semi-structured interviews that we carried out in Sweden during the autumn 2019, we found that companies and authorities are not fully in control of their agreements, when it comes to for example the origin of the agreements, the agreement routines, the storage of agreement and authorized signatures and do not fully use the potential of digital tools for managing and negotiating contracts. Unexpectedly, organizations seem to be of the opinion that the current, a little bit unmodern, system actually works for them. Therefore, new digital tools and/or digital platforms must really meet the needs of the organizations to correspond to the investment for it. Our interviews suggest that new simple digital solutions might be appreciated and used.
    Keywords: digital services; negotiations of agreements; legal tech company; lawyers; contracts and reputation.
    JEL: D86 K10 K19 K20 L14 L24 L33
    Date: 2020–12–31
  6. By: Hsieh, Chang-Chiang
    Abstract: This article compares the economic assessments conducted by judicial practice on single branding/exclusive dealing cases between the EU and the U.S. in order to gain insights on how to improve the effects-based approach to competition law. Generally speaking, the U.S. judicial practice presented a more integrated approach to examine the practical effects caused by exclusive dealing arrangements than its EU as well as Taiwanese counterpart. The U.S. cases Tampa and Standard Stations laid down the requirement to weigh the anti-competitive effect with all relevant factors taken into account. More recent cases exemplified the incorporation of the theory of Raising Rivals’ Cost (RRC) into assessment of contested conducts, which enriched the analysis of the practical effects on barriers to entry. In contrast, the EU case law has still been taking a more formalistic approach. Though it is widely acknowledged that analysis of effects on restriction of competition is required as to single branding agreements under Art. 101 TFEU, Delimitis as the leading case failed to clarify the economic logic behind and the economic relationship between the factors required to be examined. The application of Art. 102 TFEU before Intel is close to a per se standard. However, the turn of Van den Bergh and Intel to more consideration of the effect on cost of existing or potential competitors deserves more observation as to future developments. It is argued that the U.S. practice can shed light on EU competition law in two perspectives. Firstly, the test of Delimitis needs to be restructured to examine and weigh the effect of the contested agreements. Secondly, the approach for Art. 102 TFEU could be developed through adoption of similar tests with those conducted in application of Art. 101 TFEU, where assessment of barriers to entry is crucial.
    Date: 2020–12–21
  7. By: Bradley Larsen; Ziao Ju; Adam Kapor; Chuan Yu
    Abstract: Concerned about the low academic ability of public school teachers, in the 1990s and 2000s, some states increased licensing stringency to weed out low-quality candidates, while others decreased restrictions to attract high-quality candidates. We offer a theoretical model justifying both reactions. Using data from 1991–2007 on licensing requirements and teacher quality—as measured by the selectivity of teachers’ undergraduate institutions—we find that stricter licensing requirements, especially those emphasizing academic coursework, increase the left tail of the quality distribution for secondary school teachers without significantly decreasing quality for high-minority or high-poverty districts.
    JEL: I2 J2 J4 J5 K2 K31 L5 L8
    Date: 2020–12
  8. By: Mahlstedt, Robert (University of Copenhagen); Weber, Rüdiger (WU Vienna University of Economics and Business)
    Abstract: We study the effect of wrongful-discharge laws (WDL) on firm-level stock returns. We find disparate effects depending on the exact design of the law. Consistent with rational, risk-based pricing, the effect on returns seems to be linked to how firms share systematic risk with their employees under the respective laws. Firms in states with WDLs prohibiting employers from acting in bad faith have more intra-firm risk sharing and lower expected returns. Vaguer legislation that prohibits discharges in retaliation for acting in accordance with public policy is associated with less intra-firm risk sharing and higher expected returns.
    Keywords: labor protection, expected stock returns, risk sharing
    JEL: G12 J38 G38
    Date: 2020–12
  9. By: ; Osborne Jackson
    Abstract: This paper compares the distortionary impact of larceny theft across different product markets, characterizing such crime as a “hidden tax” on producers or consumers. We estimate the size of this tax and how it is affected by exogenous changes in larceny rates driven by the enactment of higher felony larceny thresholds. Pre-enactment hidden tax rates are small, ranging from 0.1 percent to 0.4 percent. These tax rates rise or fall with enactment, varying by product market. Such exogenous changes in the hidden tax induce state-level annual welfare changes that are minimal, ranging from –$1,500 to $4,700 across product markets.
    Keywords: larceny thresholds; crime; product markets; taxation; welfare
    JEL: D60 H20 K14
    Date: 2020–10–01
  10. By: Lillyana Daza Jaller; Simon Gaillard; Martín Molinuevo
    Keywords: Finance and Financial Sector Development - E-Finance and E-Security Finance and Financial Sector Development - Finance and Development Information and Communication Technologies - Information Security & Privacy Law and Development - Settlement of Investment Disputes Law and Development - Trade Law
    Date: 2020–01
  11. By: Florian Exler; Igor Livshits; James MacGee; Michèle Tertilt
    Abstract: I investigate the impact of contactless credit cards (CTCs) on cash use in Canada, using panel data between 2010 and 2017. I show that ignoring unobserved heterogeneity would lead to overstating the impact of CTCs on cash usage in a linear model. Using finite mixture modelling, I provide evidence of the differential impacts of CTCs on the extensive versus intensive margins of cash usage. I use a two-part model, with an exclusion restriction for better identification, to model both margins separately. I obtain that CTC use negatively influences the intensive margin of cash usage but not its extensive margin. There is no clear evidence of an S-curve pattern in the impact of CTCs on cash usage over the sample period.
    Keywords: Credit and credit aggregates; Credit risk management; Financial system regulation and policies
    JEL: E49 G18 K35
    Date: 2020–12
  12. By: Amuedo-Dorantes, Catalina (University of California, Merced); Lofstrom, Magnus (Public Policy Institute of California); Wang, Chunbei (University of Oklahoma)
    Abstract: Over the past two decades, the U.S. has seen a drastic growth in self-employment among Mexican immigrants, the largest immigrant population in the country. This is an interesting yet puzzling trend, in stark contrast to the stagnated growth of self-employment among other disadvantaged minority groups such as blacks and even a significant decline among whites. Little is known of what drives that growth. We propose that the expansion of interior immigration enforcement, a characteristic of the U.S. immigration policy during that time span, might have contributed to this unique trend by pushing Mexican immigrants into self-employment as an alternative livelihood. Exploiting temporal and geographic variation in immigration enforcement measures from 2005 to 2017, we show that tougher enforcement has been responsible for 10 to 20 percent of the rise in Mexican self-employment. The impact mainly concentrates among likely undocumented immigrants. It is mainly driven by police-based enforcement measures responsible for most deportations, as opposed to employment-based enforcement. Our results suggest that apprehension fear, instead of lack of employment opportunities, is the main push factor.
    Keywords: state and local immigration enforcement, undocumented immigrants, Mexican immigrants, self-employment, United States
    JEL: J15 J23 K37
    Date: 2020–12
  13. By: María J Nieto; Dalvinder Singh
    Abstract: The ambition to expand participation in the European Banking Union was to allow the ‘outs’ to enter in to close cooperation, however, it did not include the simultaneous joining of ERM II. Focusing on the cases of Bulgaria and Croatia, this paper attempts to respond to a number of questions: What is the rationale behind the double requirement of having to simultaneously apply to become a member of the ERM II and to prepare to become a member of the Banking Union via rule based “close cooperation†mechanism of coordination between the EU non-euro area NCAs and the ECB? Does the integration of close cooperation countries' banking systems with the euro area banking systems support the decision to join ERM II and ¨opting-in¨ to the SSM? Do the existing “close cooperation†arrangements guarantee greater coordination of resource-allocating decisions on prudential supervision and improved internalization of financial stability decisions? What are the advantages of the preparation to become a full member of the euro area and the SSM (e.g. coordination of macro and micro-prudential regulation; coordination of micro-prudential supervision and bank resolution)? It is evident from the research undertaken in this paper that there are clear benefits from close cooperation for the respective Member States whose domestic currencies are already linked to the euro in view of the dominant position eurozone banks have in their respective domestic markets.
    Keywords: Banking Union, Close Cooperation, ERM II
    JEL: E02 E44 F15 G15 G21 H12 K23
    Date: 2020
  14. By: Doruk, Ömer Tuğsal (Adana Alpaslan Türkeş Science and Technology University); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: We investigate the gender wage gap in three neglected MENA countries: Egypt (1980-2018), Jordan (2010-2016), and Turkey (2014-21017). We use repeated cross-sections and propensity score matching as the best way to control for observed heterogeneity. We find a much more sizeable gap than in advanced economies, but with a downward trend similar to advanced economies, reaching in Jordan a low of -0.18.
    Keywords: gender wage gap, propensity score matching, Turkey, Jordan, Egypt
    JEL: C31 J16 J31 K38
    Date: 2020–12

This nep-law issue is ©2021 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.