nep-law New Economics Papers
on Law and Economics
Issue of 2021‒03‒22
sixteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Bribes, Lobbying and Industrial Structure By Roy Cerqueti; Raffaella Coppier; Gustavo Piga
  2. Unequal Jury Representation and Its Consequences By Anwar, Shamena; Bayer, Patrick; Hjalmarsson, Randi
  3. Judicial Efficiency and Banks Credit Risk Exposure By Giulia Canzian; Antonella Rita Ferrara
  4. Police Militarization and Local Elections By Christos Mavridis; Orestis Troumpounis; Maurizio Zanardi
  5. The Right to Quit Work: An Efficiency Rationale for Restricting the Freedom of Contract By Müller, Daniel; Schmitz, Patrick W.
  7. Insolvency Issues in the European Union By Anca Roxana Bularca
  8. Wage Determination in the Shadow of the Law: The Case of Works Councilors in Germany By Laszlo Goerke; Markus Pannenberg
  9. Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football By Bernardo Guimaraes; Joao Paulo Pessoa; Vladimir Ponczek
  10. Decreasing the Number of Judicial Errors from the Perspective of Synergological Expertise in Romania By Dan Cristian
  11. Brief Considerations Regarding the Crime of Preventing Access to Compulsory Education in the Romanian Criminal Code By Nicoleta-Elena Heghes
  12. Application of Legal Instruments of Protection in the Field of Personal Data – Human Rights between Challenges and Limits By Madalina Botina; Marilena Marin
  13. The professional associations in Italy: the measurement and effects of regulation By Sauro Mocetti; Giacomo Roma
  14. Market Definition in the Platform Economy By Jens-Uwe Franck; Martin Peitz
  15. Crime, Inequality and Subsidized Housing: Evidence from South Africa By Roxana Manea; Patrizio Piraino; Martina Viarengo
  16. Redesigning EU fiscal rules: From rules to standards By Olivier J Blanchard; Ã lvaro Leandro; Jeromin Zettelmeyer

  1. By: Roy Cerqueti (Sapienza University of Rome); Raffaella Coppier (University of Macerata); Gustavo Piga (CEIS & DEF, Università di Roma "Tor Vergata")
    Abstract: This paper deals with the relationship between regulatory compliance, bureaucratic corruption, lobbying and the industrial structure of a country. We show that lobbying and bureaucratic corruption can coexist at the macro level when we allow for heterogeneity in firm size. Countries with similar level of development are often characterized by very different industrial structures: we show the implications this has for the level of compliance, corruption and lobbying in that country. Welfare implications of our model point toward encouraging policies that support the small business sector of an economy and toward exible regulatory policies meant to suppress regulation for small enough firms.
    Keywords: Bureaucratic Corruption, Lobbying, Industrial Organization
    JEL: H26 L51 K42
    Date: 2021–03–11
  2. By: Anwar, Shamena (RAND Corporation); Bayer, Patrick (Duke University); Hjalmarsson, Randi (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We analyze the extent and consequences of unequal representation on juries in Harris County, Texas. We first document that residents from predominantly white and high-income neighborhoods are substantially over-represented on juries. Using quasi-random variation in those called for jury duty each day, we next establish that Black defendants are more likely to be convicted and receive longer sentences from juries with more residents from these over-represented neighborhoods. We estimate that equal representation would reduce Black defendants’ median sentence length by 50 percent and the probability of receiving a life sentence by 67 percent. Straightforward remedies could mitigate this severe bias.
    Keywords: jury; crime; sentences; representation; inequality; race
    JEL: J15 K40
    Date: 2021–03
  3. By: Giulia Canzian; Antonella Rita Ferrara
    Abstract: We exploit the outset of a regulation seeking to improve judicial efficiency through the rearrangement of courts’ geography in Italy to provide causal evidence on the relationship between judiciary structural reforms and banks financial stability. To this end, we apply a difference-in-differences approach on a dataset on annual proceedings handled by each court over the period 2010-2017, complemented by banks balance sheet information. Our findings yield a negative effect of the reform on both judicial efficiency and Non-Performing Loans ratio. Furthermore, we identify heterogeneous effects based on the existing capacity of the courts to dispose of pending proceedings and geographical location. Digging deeper into this mechanism, we set up a causal mediation analysis to prove that the judicial system affects banks credit risk exposure both indirectly (through judicial efficiency) and directly, thereby influencing borrowers who react to the perceived enforcement.
    Keywords: judicial efficiency, non-performing loans, justice reform, difference-in-differences, mediation analysis
    JEL: D04 G21 P43
    Date: 2021
  4. By: Christos Mavridis (Middlesex University London); Orestis Troumpounis (University of Padova and Lancaster University); Maurizio Zanardi (University of Surrey)
    Abstract: US local law enforcement agencies have been receiving substantial military equipment through the “1033 Program" during the last decades. Sheriffs, one of the agencies requesting such transfers, are directly accountable to voters for their actions, so one may wonder: how do military equipment transfers in a given county affect the re-election prospects of the county's sheriff? We construct a unique dataset on local electoral races covering 6,218 sheriff elections in 2,381 counties between 2006 and 2016 and reveal the causal effect of military transfers on sheriffs' re-election probabilities: an increase in military transfers in a given county (from none to the median value) results in an increase in the probability the county's sheriff is re-elected (by 3:6 to 9:9 percentage points). This result explains sheriffs' strong support for the “1033 Program" and suggests that the image of a “tough" sheriff in town seems to be rewarded, overall providing fresh evidence on voters' responsiveness in local office elections.
    JEL: D72 H56 H76 K42
    Date: 2021–03
  5. By: Müller, Daniel; Schmitz, Patrick W.
    Abstract: A principal hires an agent to provide a verifiable service. Initially, the agent can exert unobservable effort to reduce his disutility from providing the service. If the agent is free to waive his right to quit, he may voluntarily sign a contract specifying an inefficiently large service level, while there are insufficient incentives to exert effort. If the agent's right to quit is inalienable, the underprovision of effort may be further aggravated, but the service level is ex post efficient. Overall, it turns out that the total surplus can be larger when agents are not permitted to contractually waive their right to quit work. Yet, we also study an extension of our model in which even the agent can be strictly better off when the parties have the contractual freedom to waive the agent's right to quit.
    Keywords: Moral hazard; Incentive theory; Labor contracts; Efficiency wages; Law and economics
    JEL: D23 D86 J83 K12 K31 M55
    Date: 2021
  6. By: Anghel, Răzvan (Constanța Court of Appeal, Romania)
    Abstract: The two main functions of the concept of working time - quantifying the remuneration and health and security at work protection - are found together or separately in the laws of the member states while EU law regulates working time only for the purpose of protecting health and safety at work; when Member States adopt a single regulation on working time, it may define this concept more narrowly or broadly than EU regulation. In disputes before them, when the courts of the Member States have to apply both national and EU law, they are put in a position to bring the concept of working time under national law within the limits of EU regulation. The article examines the situations in which national courts may find themselves in this process, the obligations they have and the solutions they may apply in the context of the evolution of the CJEU jurisprudence on the content of the ”working time” notion.
    Date: 2021–01–13
  7. By: Anca Roxana Bularca (Faculty of Law, Transilvania University of Brasov, Romania)
    Abstract: The material presents an analysis of the evolution of the insolvency approach at the level of the European Union as a result of the economic-financial crisis from 2009-2013 and beyond. As is well known, the Member States of the European Union have different legal systems, and their harmonization has been and is a desideratum of the management of this entity of public international law, but the practical materialization encounters a series of difficulties. Insolvency is an area of commercial law, and it has undergone a remarkable evolution lately, given on the one hand the evolution of the economy, but also the strong influence of Anglo-Saxon legislation that has proven to be much more effective. In practice. Hardly, but surely, the traditionalist legal systems for which bankruptcy is a punishment, have embraced the idea that a remedial bankruptcy is much more beneficial to the economy and have changed domestic law. At this stage, with similar domestic insolvency laws at Member State level, the European Union's leadership is in a position to adopt uniform and extremely useful rules for its economy.
    Keywords: insolvency, restructuring, second chance, honest debtor, risk prevention, debt remission
    Date: 2021–01
  8. By: Laszlo Goerke; Markus Pannenberg
    Abstract: The German law on co-determination at the plant level (Betriebsverfassungsgesetz) stipulates that works councilors are neither to be financially rewarded nor penalized for their activities. This regulation contrasts with publicized instances of excessive payments. The divergence has sparked a debate about the need to reform the law. This paper provides representative evidence on wage payments to works councilors for the period 2001 to 2015. We find wage premia of 2% to 6% in OLS-specifications, which are more pronounced for long-term works councilors. Moreover, we observe no wage premia in linear fixed-effects panel data specifications, suggesting that the OLS-results capture the effect of selection into works councillorship. We obtain no evidence for a delayed compensation or a special treatment of works councillors released from work. Hence, our results indicate that payments to works councilors are broadly in line with legal regulations.
    Keywords: labor law, wages, works councils, Socio-economic Panel (SOEP)
    JEL: J30 J51 J53 J83 K31
    Date: 2021
  9. By: Bernardo Guimaraes; Joao Paulo Pessoa; Vladimir Ponczek
    Abstract: We propose a model to study non-compete agreements and evaluate their quantitative effects. We explore an exogenous policy change that removed non-compete clauses in the market for Brazilian footballers, the Pele Act of 1998. The Act raised players' lifetime income but changed the wage profile in a heterogeneous way, reducing young players' salaries. We structurally estimate the model's parameters by matching wages and turnover profiles in the post Act period. By changing a single parameter related to the non-compete friction, we can match the changes in the age-earnings profile. We then show that the bulk of income gains is due to distributional forces, with efficiency gains playing a minor role.
    Keywords: labor mobility, labor frictions, wage profile, labor turnover
    JEL: J30 J41 J60 K31 Z22
    Date: 2021–03
  10. By: Dan Cristian (Dimitrie Cantemir Christian University of Bucharest, Romania)
    Abstract: The administration of justice in any state in the world is done by people and is therefore not perfect. Judicial errors can occur for various reasons, most often the subjective human factor that leads to final court decisions that can affect the entire existence of a suspect. There have been countless cases in which those sentenced by final and irrevocable sentences to years of imprisonment have been acquitted before serving their sentences, as it has been shown that the criminal act allegedly committed by them was in fact committed by another perpetrator. At other times, the acquittal decision was taken after the convict had fully completed the sentence, which produced its legal effect only for the rehabilitation institution. The article aims to analyze some of these judicial errors, the causes that determine them and their effects on the life course of the individual suspected of committing an illegal act, for different branches of law, from the perspective of synergological science. Some conclusions drawn at the end of the paper will aim to strengthen the arguments presented regarding the benefit of a forensic synergological expertise.
    Keywords: civil law, psychology, criminal law, body language, criminal act, guilt, micro-expression, judicial errors, psychological expertise
    Date: 2021–01
  11. By: Nicoleta-Elena Heghes (Dimitrie Cantemir Christian University of Bucharest, Faculty of Juridical and Administrative Sciences, Bucharest, Romania)
    Abstract: The inclusion of this crime in the current Romanian Criminal Code was a necessity given the alarming increase in the dropout rate by students in lower classes and beyond. The legislator considered it necessary to sanction the parents or guardians of minors who prevent their access to compulsory education in order to ensure the child’s right to education. The text of the law does not refer to the situations in which this abandonment is determined by a precarious material situation, in which case the state must intervene by other means, but the situations in which the parent acts abusively, withdrawing the minor from studies or preventing to follow them, although he would have had all the conditions for it. The deed is not punished, if before the end of the criminal investigation the defendant ensures the resumption of the attendance of the courses by the minor. If, until the conviction is final, the defendant ensures the resumption of attendance by the minor, the court shall, as appropriate, postpone the application of the sentence or suspend the execution of the sentence under supervision, even if the conditions provided by law are not met.
    Keywords: crime, education, minor, right to education, school dropout
    Date: 2021–01
  12. By: Madalina Botina (Ovidius University of Constanta, Romania); Marilena Marin (Ovidius University of Constanta, Romania)
    Abstract: This paper proposes the analysis of a situation that may arise in the matter of personal data, when we talk about the protection of such data, as well as about the applicable legislation, referring to those legal instruments for the protection of personal data. Since the implementation of the legal texts also implies the confrontation with the reality or with the factual situation, the working hypothesis we propose is that of the limitations that appear regarding the exercise of what we generically call “human rights†. These limitations and the way in which the legislation has the capacity to deal in particular with respect for human rights, are challenges that we will analyze in our paper. As a working method, we chose qualitative analysis, observation and comparison, using various types of normative acts applicable in European countries. As a subject of analysis, I preferred the legislation within the European Union, as well as the Romanian legislation.
    Keywords: human rights, personal data, sensitive data, regulation, directive, legal instruments
    Date: 2021–01
  13. By: Sauro Mocetti (Bank of Italy); Giacomo Roma (Bank of Italy)
    Abstract: In Italy, regulated occupations that require enrolment in a professional association represent a significant share of overall employment, especially of more highly educated workers. This paper presents a new index measuring the degree of regulation that highlights the heterogeneity between the different professional bodies and shows the impact on the corresponding income from work. Some evidence on the processes of (self) selection in the occupations and the need to take into account the structural changes in the service market suggest that the quality of regulation could improve in some areas.
    Keywords: regulated professions, professional associations, regulation, incomes
    JEL: J44 K20 J24
    Date: 2021–02
  14. By: Jens-Uwe Franck; Martin Peitz
    Abstract: The article addresses the role market definition can play for EU competition practice in the platform economy. The focus is on intermediaries that bring together two (or more) groups of users whose decisions are interdependent and which therefore are commonly referred to as “two-sided platforms”. We address challenges to market definition that accompany these cross-group network effects, assess current practice in a number of cases with the European Commission and Member States’ competition authorities, and provide guidance on how practice is to be adapted to properly account for the economic forces shaping markets with two-sided platforms. Owing to the complementarities of services provided to the user groups the platforms cater to, the question arises whether and when a single market can be defined that encompasses both sides. We advocate a multi-markets approach that takes account of cross-market linkages, acknowledges the existence of zero-price markets, and properly accounts for the homing behaviour of market participants.
    Keywords: antitrust law, EU competition practice, market definition, market power, Market Definition Notice, two-sided platforms, digital markets, network effects, matching platforms, zero-price markets, homing decisions, SSNIP test
    JEL: K21
    Date: 2021–01
  15. By: Roxana Manea; Patrizio Piraino; Martina Viarengo
    Abstract: We study the relationship between housing inequality and crime in South Africa. We create a novel panel dataset combining information on crimes at the police station level with census data. We find that housing inequality explains a significant share of the variation in both property and violent crimes, net of spillover effects, time and district fixed effects. An increase of one standard deviation in housing inequality explains between 9 and 13 percent of crime increases. Additionally, we show that a prominent post-apartheid housing program for low-income South Africans led to a reduction in inequality and a decline in violent crimes. Together, these findings suggest the important role that equality in housing conditions can play in the reduction of crime in an emerging economy context.
    Keywords: inequality, crime, economic development
    JEL: D63 O10 K14
    Date: 2021
  16. By: Olivier J Blanchard (Peterson Institute for International Economics); Ã lvaro Leandro (CaixaBank Research); Jeromin Zettelmeyer (Peterson Institute for International Economics)
    Abstract: The European Union’s fiscal rules have been suspended until at least the end of 2021. When they are reinstated, they will need to be modified, if only because of the high levels of debt. Proposals have been made—and more are to come—suggesting various changes and simplifications. Blanchard, Leandro, and Zettelmeyer take a step back and discuss how one should think about debt sustainability in the current and likely future EU economic environment. They argue that, given the complexity of the answer, it is an illusion to think that EU fiscal rules can be simple. But it is also an illusion to think that they can ever be complex enough to accommodate most relevant contingencies. Instead, the authors propose abandoning fiscal rules in favor of fiscal standards, i.e., qualitative prescriptions that leave room for judgment together with a process to decide whether the standards are met. Central to this process would be country-specific assessments using stochastic debt sustainability analysis, led by national independent fiscal councils and/or the European Commission. Disputes between member states and the European Commission on application of the standards should preferably be adjudicated by an independent institution, such as the European Court of Justice (or a specialized chamber), rather than by the Council of the European Union.
    Keywords: interest rates, fiscal policy, public debt, primary balance, fiscal deficit, fiscal rules, fiscal governance, fiscal standards, debt sustainability analysis
    JEL: E62 F42 H60 H61 H62 H63
    Date: 2021–02

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