nep-law New Economics Papers
on Law and Economics
Issue of 2021‒07‒12
25 papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. An Integrated Theory of Litigation and Legal Standards By Álvaro Bustos; Nuno Garoupa
  2. How laws affect the perception of norms: empirical evidence from the lockdown By Roberto Galbiati; Emeric Henry; Nicolas Jacquemet; Max Lobeck
  3. The (Other) Effects of Restricting Access to Higher Courts: The Case of Wrongful Terminations in Labor Contracts in Chile By Álvaro Bustos; Pablo Bravo-Hurtado; Antonio Aninat
  4. How Does Court Stability Affect Legal Stability? By Álvaro Bustos
  5. Weather and appeal court decisions in divorce cases in France By Marc Deschamps; Bruno Jeandidier; Julie Mansuy
  6. Permitting prohibitions By Guimaraes, Bernardo; Salama, Bruno Meyerhof
  7. The Effects of Government Licensing on E-commerce: Evidence from Alibaba By Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Chunxiao Li
  8. Evolution of deterrence with costly reputation information By Berger, Ulrich; De Silva, Hannelore
  9. Consequences of violence against social leaders in Colombia By German Orbegozo
  10. The Directive on Unfair Trading Practices in the Agri-Food Supply Chain: Regulatory Ambitions and Legal Instruments By Jens-Uwe Franck
  11. Extending alcohol retailers' opening hours: Evidence from Sweden By Daniel Avdic; Stephanie von Hinke
  12. Criminal capital persistence: Evidence from 90,000 inmates’ releases By Santiago Tobón Zapata; Maria Antonia Escobar Bernal; Martin Vanegas Arias
  13. Adapting Competition Law and Policy for Economic Development with Asian Illustrations By Majah-Leah V. Ravago; James A. Roumasset; Arsenio M. Balisacan
  14. Labour Standards By Gunderson, Morley
  15. El Salvador’s Bitcoin Law is Destined to Be Caught in the FATF’s Regulatory Web By Hanke, Steve; Hanlon, Nicholas; Thakkar, Parth
  16. Hayek and the Texas blackout By Littlechild, S.; Kiesling, L.
  17. Turning a "Blind Eye"? Compliance with Minimum Wage Standards and Employment By Garnero, Andrea; Lucifora, Claudio
  18. How Companies Can Protect Against Securities Class Action Lawsuits Using Risk Factor Disclosure By Allen Huang
  19. Financial misconduct and employee mistreatment: evidence from wage theft By Raghunandan, Aneesh
  20. Entitled to Property: Inheritance Laws, Female Bargaining Power, and Child Health in India By Hossain, Md Shahadath; Nikolov, Plamen
  21. Impacts of the Clean Air Act on the Power Sector from 1938-1994: Anticipation and Adaptation By Clay, Karen; Jha, Akshaya; Lewis, Joshua; Severnini, Edson R.
  22. What Does Codetermination Do? By Jäger, Simon; Noy, Shakked; Schoefer, Benjamin
  23. Sentiment and Uncertainty about Regulation By Tara M. Sinclair; Zhoudan Xie
  24. Police Repression and Protest Behavior: Evidence from Student Protests in Chile By Felipe González; Mounu Prem
  25. Does Finland Need R&D Tax Incentives? By Koski, Heli; Fornaro, Paolo

  1. By: Álvaro Bustos; Nuno Garoupa
    Abstract: I propose an integrated understanding of litigation and legal standards that allows us to answer key questions in the functioning of common law legal systems: When do substantive trials occur?; does society face too many or too few of these trials?; and can legal standards be used to correct a potentially inefficient frequency of litigation? I characterize the dynamics of substantive trials and predict their occurrence on an infinite horizon. I show, for three reasons, that private and socially optimal litigation frequencies are not equal, identifying corrections. I also derive state contingent and non-contingent optimal standards, and discuss policy implications.
    Date: 2020
  2. By: Roberto Galbiati (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Max Lobeck (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Laws not only affect behavior due to changes in material payoffs, but they may also change the perception individuals have of societal norms, either by shifting them directly or by providing information on these norms. Using detailed daily survey data and exploiting the introduction of lockdown measures in the UK in the context of the COVID-19 health crisis, we provide causal evidence that the law drastically changed the perception of the norms regarding social distancing behaviors. We show this effect of laws on perceived norms is mostly driven by an informational channel.
    Date: 2020–08–09
  3. By: Álvaro Bustos; Pablo Bravo-Hurtado; Antonio Aninat
    Abstract: It is commonly argued that the case overload faced by higher courts (especially in civil law) can be reduced by restricting access to them. In this paper we prove that such restriction can also significantly reduce judicial uniformity among lower courts and alter litigation decisions as well as outcomes. To test our predictions we build a database of wrongful termination lawsuits that took place before and after the implementation of a reform to the Chilean labor justice system. This reform exogenously and drastically reduced access to higher courts. As we predict, this reduction increased the probability of a first-instance pro-plaintiff decision (by 36%); increased the percentage recovered by a plaintiff in court (by 27%) and reduced the probability of a settlement (by 16%). The Priest & Klein 50% hypothesis suggests that prior to the reform plaintiffs recovered too little. Policy implications follow.
    Date: 2020
  4. By: Álvaro Bustos
    Abstract: The formation of coalitions in a court has attracted the attention of political scientists and legal economists. The question we address in this article is the extent to which coalition stability impacts the law. We consider a model where a court has two judicial coalitions, majority and minority. However, they may change their relative influence over time. We show that, while both sides have a preferred legal policy and want their standard to become law, the two coalitions may compromise on not changing the standard, thus maintaining the status quo, because of majority uncertainty in the future. One important implication from our article is that less certainty concerning the future (in terms of majority and minority) could actually make the law more stable in the present (since the standard is unchanged). In addition, we prove that moderate standards are more likely to endure the passage of time when compared to extreme standards.
    Date: 2020
  5. By: Marc Deschamps (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Bruno Jeandidier (University of Lorraine and CNRS, BETA, 21-23 rue Baron Louis, 54000 Nancy, France); Julie Mansuy (University of Lorraine and CNRS, BETA, 21-23 rue Baron Louis, 54000 Nancy, France)
    Abstract: While there is a fairly extensive literature on the relationship between weather and productivity, little research has focused on the impact of weather on judicial activity. The findings from the few investigations conducted arrive at different conclusions depending on the country. We contribute to this area of research by conducting the first analysis using French data. We propose an empirical analysis of the impact of outdoor temperature and rainfall levels on court decisions made in French courts of appeal during divorce proceedings, based on a sample of approximately 4,000 court decisions correlated with daily and geo-localized meteorological data. The analysis focuses on decisions regarding the amount of child support to be paid. We show that, all other things being equal, when it is very hot at night preceding the judgment, the panels of judges tend to set lower amounts of child support.
    Keywords: Weighted voting games, symmetric voters, inconsistent weighting, probability.
    JEL: K36 Q54
    Date: 2021–06
  6. By: Guimaraes, Bernardo; Salama, Bruno Meyerhof
    Abstract: We propose a model where the probability that courts will enforce a statute is endogenous to the statute itself. We obtain, rst, that the enactment of legislation prohibiting something might raise the probability that courts will allow related things not expressly forbidden. We call that a permitting prohibition and discuss examples that are consistent with the model. Second, we obtain that dispersion of court decisions might be greater with legislation that commands little court deference, than with legislation that commands none. Thus, within a certain range, legislation improvement might trade-o¤ with court predictability.
    Date: 2021–07–05
  7. By: Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Chunxiao Li
    Abstract: Using proprietary data from Alibaba, we examine how the 2015 Food Safety Law (FSL) affects e commerce in China. The FSL requires most food sellers on e-commerce platforms to obtain a valid online license for retail food handling. Because the FSL was rolled out progressively, we have a rare opportunity to observe a gradual transition from voluntary certification to partial licensing and mandatory licensing. Data summary shows that, conditional on sellers with valid licensing information, those that had a better online reputation and more online food sales before the FSL tend to display their FSL license earlier on the platform, and buyers are more willing to transact with a seller after she displays her FSL license. This positive response is stronger for younger and less reputable sellers, suggesting that the license provides useful information in addition to what consumers observe on the platform. To identify the causal impact of the FSL, we compare food and non-food categories via synthetic control matching. We find that the average quality of surviving food sellers has improved after partial and mandatory licensing, partly because those who are unwilling to obtain the FSL license must exit the platform. Despite an increase in seller concentration, the platform's gross merchandise value in the food category did not decline post FSL, nor did the average sales price increase significantly one year into the full enforcement of the FSL. This suggests that the FSL does not hamper the long-run performance of the regulated market, probably because it has enhanced seller quality and market transparency on the platform.
    Keywords: Market structure and pricing; Recent economic and financial developments
    JEL: D82 K23 L5 L81
    Date: 2021–07
  8. By: Berger, Ulrich; De Silva, Hannelore
    Abstract: Deterrence, a defender’s avoidance of a challenger’s attack based on the threat of retaliation, is a basic ingredient of social cooperation in several animal species and is ubiquitous in human societies. Deterrence theory has recognized that deterrence can only be based on credible threats, but retaliating being costly for the defender rules this out in one-shot interactions. If interactions are repeated and observable, reputation building has been suggested as a way to sustain credibility and enable the evolution of deterrence. But this explanation ignores both the source and the costs of obtaining information on reputation. Even for small information costs successful deterrence is never evolutionarily stable. Here we use game-theoretic modelling and agent-based simulations to resolve this puzzle and to clarify under which conditions deterrence can nevertheless evolve and when it is bound to fail. Paradoxically, rich information on defenders’ past actions leads to a breakdown of deterrence, while with only minimal information deterrence can be highly successful. We argue that reputation-based deterrence sheds light on phenomena such as costly punishment and fairness, and might serve as a possible explanation for the evolution of informal property rights.
    Keywords: Deterrence, Reputation, Cooperation, Property rights, Costly punishment, Evolution
    Date: 2021–06
  9. By: German Orbegozo
    Abstract: I study the causal effect of violence against social leaders on coca cultivation and land restitution requests in the Colombian context from 2012 to 2018. Using the timing of unexpected killings of social leaders in an event study approach, I provide evidence that the start of the violence against social leaders increases hectares of coca by a magnitude of at least 0.27 standard deviations and reduces land restitution requests by a magnitude of at least 0.29 standard deviations, both in the medium term. As more leaders get killed, the effect becomes larger over time. Attempts to kill social leaders have a similar impact on the outcomes. I provide evidence that suggests that this effect is driven by the deterioration of the collective action capacity of civil society, which is depreciated as more violence is exerted on social leaders.
    Keywords: Social leader, Killing, Collectiveaction, Coca, Land Restitution
    JEL: D7 D74 K42 O10 O17
    Date: 2021–06–15
  10. By: Jens-Uwe Franck
    Abstract: The Directive on Unfair Trading Practices in the Agri-food Supply Chain is characterized by its objective to increase agricultural producers’ income by redistributing the gains from trade along the supply chain. In this article, arguments are advanced that make it doubtful whether this goal can be achieved: the Directive’s restrictions will (at best) only slightly increase the suppliers’ relative bargaining power. Neither the attempt to limit the Directive’s scope to cases of unequal bargaining power nor the ban of only those practices that are regarded as particularly “egregious” will ensure that the Directive’s restrictions do not also preclude efficiency-enhancing practices. Nonetheless, given the legislature’s wide discretionary power, the Directive could legally be adopted on the basis of Article 43(2) TFEU. While the Directive’s focus is entirely on public enforcement, there are sound reasons to believe that the Directive assigns implicit rights to those parties that are within the Directive’s protective scope and that are (potentially) aggrieved by infringements. The consequences of the incorporation of prohibited contract terms are analysed and potential legal bases for private rights of action are discussed.
    Keywords: Directive (EU) 2019/633, European Union, Common Agricultural Policy, Unfair Trading Practices, Agri-food Supply Chain, Distribution, Retailing, Buyer Power, Contracts
    JEL: K12 L14 Q18
    Date: 2021–06
  11. By: Daniel Avdic; Stephanie von Hinke
    Abstract: Excessive alcohol use is associated with a wide range of adverse outcomes that inflict large societal costs. This paper investigates the impacts of increases in regulated opening hours of Swedish alcohol retailers on alcohol purchases, health and crime outcomes by relating changes in these outcomes in municipalities that increased their retail opening hours to those in municipalities whose opening hours remained unchanged. We show that extended opening hours led to statistically and economically significant increases in alcohol purchases by around two percent per weekly opening hour, but find no corresponding increases in adverse outcomes related to the consumption of alcohol. We study potential mechanisms, such as consumption spillovers and on and off-premise substitution, and we discuss policy implications of our findings.
    Date: 2021–06–24
  12. By: Santiago Tobón Zapata; Maria Antonia Escobar Bernal; Martin Vanegas Arias
    JEL: D04 H41 J24 K14 K42
    Date: 2021–06–22
  13. By: Majah-Leah V. Ravago (Department of Economics, Ateneo de Manila University); James A. Roumasset (Economics Department, University of Hawaii); Arsenio M. Balisacan (Philippine Competition Commission)
    Abstract: Do the needs of countries in different economic environments and at various stages of development warrant different policies? In the pursuit of economic development and consumer welfare, competition policy should curb rent-seeking and promote market efficiency without interfering with the extra-market institutions for the dynamic promotion of specialization, innovation, and investment coordination. This requires the coordination of competition policy with other economic roles of government including trade, industrial, and infrastructure policies. We investigate the impact of adoption of competition law on long-term economic growth using cross-country data from 1975-2015. Countries may choose to adopt – or not adopt – competition law depending on their circumstances, including level of economic development, institutions, and geography. Considering endogeneity and self-selection, we employ an endogenous switching regression allowing for the interdependence of economic growth and adoption of competition law. Our analysis shows that adoption increased the growth rates in adopting countries but would have decreased growth in non-adopting countries. This suggest that countries should not be pressured to prematurely adopt competition law but a limited international or regional agreement such as harmonization of policies may instead be pursued. In addition to correcting the abuses of anti-competitive behavior, competition policy should be designed to promote innovation and productivity growth and be well-coordinated with trade and domestic policies. We review these arguments focusing on Asian countries. The cases of Korea, Thailand, and the Philippines capture the characteristics of the law and authorities at various stages of maturity.
    Keywords: Competition policy, antitrust, economic development, economic growth, Asia
    JEL: L40 L51 L52 K21 O57 O53
    Date: 2021–06
  14. By: Gunderson, Morley
    Abstract: This chapter deals with the question of whether labour standards are less relevant or more relevant for the new world of work which is vastly different from the old world of work when most labour standards were first established. The various rationales for labour standards are first outlined. This is followed by a discussion of the changing pressures in the labour market that emanate from various forces: the pressures affecting employers and hence their demand for labour; the changing nature of the supply of labour; changes in forms of employee representation and the legal and regulatory environment in which the parties operate; and changes in the workplace and human resource practices within firms. These pressures lead to a changing role and need for labour standards, generally increasing the need, but also tending to reduce the ability of governments to provide such standards. Some illustrative evidence of the impact of specific labour standards is outlined, followed by a discussion of labour standards in developing and emerging economies. The paper concludes with a discussion of possible elements of smart regulation in this area to deal with the difficult trade-off between the increased need for labour standards confronting the reduced ability of governments to provide such standards.
    Keywords: labour standards,vulnerable workers,strategic enforcement,terminations,advance notice,maximum hours,overtime,parental leaves
    JEL: J8 K31
    Date: 2021
  15. By: Hanke, Steve (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Hanlon, Nicholas (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Thakkar, Parth (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: In the middle of the night of June 8th, El Salvador’s Congress hastily passed the Bitcoin Law. This law will make bitcoin legal tender (actually, forced tender). Since the modalities concerning the implementation of the Bitcoin Law change with each passing day, we cannot opine on the details surrounding the scheduled launch of the Bitcoin Law on September 7, 2021. That said, it’s abundantly clear that if the Bitcoin Law is actually implemented, El Salvadoran banks, merchants, and their customers will cross swords with Financial Action Task Force regulators and be ensnared in the FATF’s web of regulations.
    Date: 2021–07–02
  16. By: Littlechild, S.; Kiesling, L.
    Abstract: Was the Texas blackout a market failure or regulatory failure? The economist Hayek has been adduced in support of both views. Hayek would have approved the competitive Texas system, including ERCOT. His likely view on the scarcity pricing framework is less clear, and the recent regulatory implementation of the “circuit breaker†was problematic. There is now a need to revise the scarcity pricing framework in the light of recent events, and to reflect ever-changing market conditions.
    Keywords: Hayek, Texas blackout, scarcity pricing, retail electricity competition
    JEL: L94 L51 K23 D47 D82
    Date: 2021–06–24
  17. By: Garnero, Andrea (European Commission, Joint Research Centre); Lucifora, Claudio (Università Cattolica del Sacro Cuore)
    Abstract: Turning a "blind eye" to non-compliance with minimum wage standards is sometimes presented as a pragmatic way to accommodate higher wages while not harming employment opportunities for workers employed in marginal firms. In this paper, we model firms' wage and employment decisions, and show that there may be a trade-off between non-compliance and employment. The main prediction of the model are empirically tested using data from the Italian labour force survey. We find evidence of a positive employment non-compliance effect, though elasticities are smaller than typically thought as employers internalize the expected costs of non-compliance. We also show that employment effects are larger at low levels of non-compliance (when the risk of being referred to court is very low). The implications for policy and the role of regulators in monitoring and sanctioning non-compliance are discussed.
    Keywords: collective bargaining, sectoral minimum wages, compliance
    Date: 2021–06
  18. By: Allen Huang (Assistant Professor, Department of Accounting , Hong Kong University of Science and Technology Technology.Author-Email:
    Abstract: Securities class action lawsuits are arguably the most significant litigation risk for firms listed in the US, UK, Australia and Canada, with an average settlement of $3.4 billion USD in the US in the last decade. Despite managers' intention to provide information to investors by discussing forward-looking information, investors often sue companies for providing overly optimistic forecasts when the outcome is negative. Our research shows that managers perceive lower litigation risk in issuing forward-looking information when they disclose sufficiently detailed risk factor disclosures and invoke the safe harbor protection. Firms that consider listing in the United States should provide sufficient risk factor disclosure to avoid becoming targets in securities class action lawsuits.
    Date: 2021–01
  19. By: Raghunandan, Aneesh
    Abstract: I examine the relation between firms’ financial conduct and wage theft. Wage theft represents the single largest form of theft committed in the United States and primarily affects firms’ most vulnerable employees. I show that wage theft is more prevalent (i) when firms just meet or beat earnings targets and (ii) when executives’ personal liability for wage theft decreases. Wage theft precedes financial misconduct while the theft is undetected, but once firms are caught engaging in wage theft they are more likely to shift to engaging in financial misconduct. My findings highlight an economically meaningful yet previously undocumented way in which firms’ financial incentives relate to employee treatment.
    Keywords: wage theft; real earnings management; financial misconduct; labor practices; Springer deal
    JEL: J31 J83 K31 M14 M41
    Date: 2021–06–15
  20. By: Hossain, Md Shahadath (State University of New York); Nikolov, Plamen (State University of New York)
    Abstract: Child height is a significant predictor of human capital and economic status throughout adulthood. Moreover, non-unitary household models of family behavior posit that an increase in women's bargaining power can influence child health. We study the effects of an inheritance law change, the Hindu Succession Act Amendment (HSAA), which conferred enhanced inheritance rights to unmarried women in India, on child height. We find robust evidence that the HSAA improved the height and weight of children. In addition, we find evidence consistent with a channel that the policy improved the women's intrahousehold bargaining power within the household, leading to improved parental investments for children. These study findings are also compatible with the notion that children do better when their mothers control a more significant fraction of the family resources. Therefore, policies that empower women can have additional positive spillovers for children's human capital.
    Keywords: human capital, height, bargaining, parental investments, developing countries, India
    JEL: D13 I12 I13 J13 J16 J18 K13 O12 O15 Z12 Z13
    Date: 2021–06
  21. By: Clay, Karen (Carnegie Mellon University); Jha, Akshaya (Carnegie Mellon University); Lewis, Joshua (University of Montreal); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: The passage of landmark government regulation is often the culmination of evolving social pressure and incremental policy change. During this process, firms may preemptively adjust behavior in anticipation of impending regulation, making it difficult to quantify the overall economic impact of the legislation. This study leverages newly digitized data on the operation of virtually every fossil-fuel power plant in the United States from 1938-1994 to examine the economic impacts of the 1970 Clean Air Act (CAA) on the power sector. This unique long panel provides us an extended pre-regulation benchmark, allowing us to account for both anticipatory behavior by electric utilities in the years leading up to the Act's passage and reallocative effects of the CAA across plant vintages. We find that the CAA led to large and persistent decreases in output and productivity, but only for plants that opened before 1963. The timing aligns with the passage of the original 1963 CAA, which provided the federal government with the authority to "control" air pollution, sending a strong signal to firms of impending federal regulation. We provide historical evidence of anticipatory responses by utilities in the design and siting of plants that opened after 1963. We also find that the aggregate productivity losses of the CAA borne by the power sector were substantially mitigated by the reallocation of output from older less efficient power plants to newer plants.
    Keywords: power plants, electricity generation, total factor productivity, clean air act, air quality regulations, NAAQS
    JEL: K32 N52 Q52
    Date: 2021–06
  22. By: Jäger, Simon (Massachusetts Institute of Technology); Noy, Shakked (Massachusetts Institute of Technology); Schoefer, Benjamin (University of California, Berkeley)
    Abstract: We provide a comprehensive overview of codetermination, i.e., worker representation in firms' governance and management. We cover the institution's history, implementation, and the best available evidence on its economic impacts. We argue that existing quasi-experimental estimates suggest that codetermination has zero or very small positive effects on worker and firm outcomes at the partial-equilibrium firm level. In addition, we test for general-equilibrium effects of codetermination laws using novel cross-country event studies exploiting a series of codetermination reforms between the 1960s and 2010s, and find no evidence that codetermination laws shift aggregate economic outcomes or the quality of industrial relations. We offer three potential explanations of the institution's limited impact. First, existing codetermination laws convey relatively little authority to workers. Second, countries with codetermination laws have high baseline levels of informal worker involvement in decision-making, independently of formal codetermination. Third, codetermination laws may interact with other labor market institutions, such as union representation and collective bargaining. We close by discussing implications of these facts for recent codetermination proposals in the United States.
    Keywords: codetermination, unions, worker representation
    JEL: J08 K31 M1 M5
    Date: 2021–06
  23. By: Tara M. Sinclair (The George Washington University); Zhoudan Xie (The George Washington University)
    Abstract: Regulatory policy can create economic and social benets, but poorly designed or excessive regulation may generate substantial adverse effects on the economy. In this paper, we present measures of sentiment and uncertainty about regulation in the U.S. over time and examine their relationships with macroeconomic performance. We construct the measures using lexicon-based sentiment analysis of an original news corpus, which covers 493,418 news articles related to regulation from seven leading U.S. newspapers. As a result, we build monthly indexes of sentiment and uncertainty about regulation and categorical indexes for 14 regulatory policy areas from January 1985 to August 2020. Impulse response functions indicate that a negative shock to sentiment about regulation is associated with large, persistent drops in future output and employment, while increased regulatory uncertainty overall reduces output and employment temporarily. These results suggest that sentiment about regulation plays a more important economic role than uncertainty about regulation. Furthermore, economic outcomes are particularly sensitive to sentiment around transportation regulation and to uncertainty around labor regulation.
    Keywords: Regulation, text analysis, NLP, sentiment analysis, uncertainty
    JEL: E2 E3 K2 O4
    Date: 2021–06
  24. By: Felipe González; Mounu Prem
    Abstract: Police repression is a common feature of street protests around the world but evidence about its impact on dissident behavior is limited. We provide an empirical analysis of people linked to a student killed by a stray bullet coming from a policeman during a large protest. Using administrative data on daily school attendance, we follow his schoolmates and those living nearby the shooting in hundreds of protest and non-protest days to estimate whether police repression affected their protest behavior. We find that repression causes a temporary deterrence effect but only on students with social (rather than geographic) links to the victim. Moreover, we show that police violence increased adherence to a student-led boycott two years after the shooting and had negative educational consequences for students. These findings cast doubt on the effectiveness of police repression in quieting dissent and ensuring public safety.
    Date: 2020
  25. By: Koski, Heli; Fornaro, Paolo
    Abstract: Abstract In OECD countries, tax subsidies are widely used to increase incentives for companies to invest in research and development. Recent international research suggests that R&D tax support increases both R&D investment and patent applications. However, it is unclear what kind of R&D tax scheme provides the best incentives for companies to invest in research and development and generate innovation. There are considerable differences between the countries’ R&D tax relief schemes, not only in terms of the amount of tax relief but also in terms of the characteristics of the tax support scheme. Typically, a company can make a tax deduction from income tax based on the total volume of R&D costs underlying the relief. Our empirical analysis among 35 OECD countries during 2000–2018 indicates that the generosity of the R&D tax subsidies positively relates to the R&D investment intensity of the corporate sector. Our study further suggests that the R&D intensity and the number of patent applications filed with the USPTO are higher in the countries that use either the incremental R&D tax scheme or the hybrid scheme involving incremental and volume-based R&D tax deduction possibilities.
    Keywords: R&D tax incentives, R&D investments, Innovation policy, Patents
    JEL: K34 L5 O3 O31
    Date: 2021–06–30

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