nep-law New Economics Papers
on Law and Economics
Issue of 2021‒10‒04
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Can recidivism be prevented from behind bars? Evidence from a behavioral program By William Arbour
  2. Playing Whac-A-Mole in the Fight against Corruption: Evidence from Random Audits in Brazil By Maximiliano Lauletta; Martín Rossi; Christian Ruzzier
  3. Right to Research and Copyright Law: From Photocopying to Shadow Libraries By Ram Mohan, M.P.; Gupta, Aditya
  4. Information leakage, imitation, and the patent system By Czarnitzki, Dirk; van Criekingen, Kristof
  5. Measuring Police Presence in US Cities using Smartphone Data By M. Keith Chen; Katherine L. Christensen; Elicia John; Emily Owens; Yilin Zhuo
  6. Indigenous-Municipal Legal and Governance Relationships By Doug Anderson; Alexandra Flynn
  7. Exploring Horizontal Mergers in Swedish District Courts Using Convex and Nonconvex Technologies: Usefulness of a Conservative Approach By Xiaoqing Chen; Kristiaan Kerstens; Qingyuan Zhu
  8. Does Restricting the Availability of Cigarettes Reduce Smoking? By Nakamura, Ryota; Yao, Ying
  9. Are risk-based tax audit stretegies rewarded? An analysis of corporate tax avoidance By Eberhartinger, Eva; Safaei, Reyhaneh; Sureth, Caren; Wu, Yuchen
  10. Should Economics Play a Greater Role in the Adjudication of Human Rights Claims? The Examples of Injury to Dignity and the Duty to Accommodate By David Lewis; Ian Currie
  11. Marijuana Liberalization Policies and Perinatal Health By Angélica Meinhofer; Allison E. Witman; Jesse M. Hinde; Kosali I. Simon
  12. What we pay in the shadow: Labor tax evasion, minimum wage hike and employment By Nicolas Gavoille; Anna Zasova
  13. Services Domestic Regulation - Locking in good regulatory practices: Analyzing the prevalence of Services Domestic Regulation disciplines and their potential linkages with economic performance By Baiker, Laura; Bertola, Elena; Jelitto, Markus

  1. By: William Arbour (University of Toronto)
    Abstract: Incarcerated offenders are offered a wide range of programs to encourage their chances of successful reintegration into society. Little is known, however, about the degree to which such programs improve prisoners’ reentry. In this paper, I study the effects of a cognitive-behavioral program implemented in Quebec, Canada, with a rich micro-level dataset. To manage the econometric issue of inmates’ self-selection into the program, I exploit inmates’ random assignment to probation officers who exhibit varying propensities to recommend the rehabilitation measure. I find large, negative, and significant effects of the program on recidivism, as measured by an inmate’s probability of serving a subsequent sentence: within one year following release, the program reduces recidivism by up to 18 percentage points. Moreover, the program is shown to decrease the number of future offenses. Further analyses indicate that the most plausible mechanism can be attributed to the program’s success in altering offenders’ preferences towards crime.
    Keywords: program, incarceration, recidivism, cognitive-behavioral, judges fixed effects
    JEL: A1
    Date: 2021
  2. By: Maximiliano Lauletta (Department of Economics, University of California, Berkeley); Martín Rossi (Department of Economics, Universidad de San Andres); Christian Ruzzier (Department of Economics, Universidad de San Andres)
    Abstract: Audits can reduce corruption, but corrupt officials may be able to substitute to alternate forms of corruption when the anticorruption policy controls only certain types of corruption. By exploiting the random assignment of municipalities to a large, successful, audit program in Brazil, we document unintended (and undesirable) consequences of such selective anticorruption monitoring: audited municipalities employ more labor in water provision, and this translates into a more inefficient service. We also provide additional evidence consistent with the idea that local officials may be using their discretion in hiring to substitute between different forms of corruption.
    Keywords: corruption, audits, efficiency, development, employment, water & sanitation
    JEL: D73 D78 H42 K42 L95
    Date: 2021–09
  3. By: Ram Mohan, M.P.; Gupta, Aditya
    Abstract: Academic research and publishing are facing a crisis. The importance of access to academic literature in an interconnected world, the ever-growing cost of subscriptions to this literature, different revenue models of journals, and reducing or stagnant library budgets are pushing research and the academic community to find alternatives for academic research and publications. In its 25 years of existence, the open access movement and models which sought to contain the crisis have become the subject of considerable criticism. At the same time, a significant portion of academic literature remains locked behind steep paywalls. This has led to the growth of pirate websites and shadow libraries which have been met with forceful legal retribution by the publishers using Copyright laws. Using the Sci-Hub case, which is currently facing copyright infringement by a group of publishers before the Delhi High Court, the article evaluates the Open Access Movement, fair dealing in copyright law, academic piracy, and courts cases in the United States, India, and other countries, within the broad meaning of the right to research. The paper concludes that the purposive interpretation of the Copyright Law may have an answer enabling a just outcome.
    Date: 2021–09–24
  4. By: Czarnitzki, Dirk; van Criekingen, Kristof
    Abstract: From a firm's perspective two competing forces are driving the decision to invest in innovation. On the one hand, innovative performance is an important driver of profitability and growth. On the other hand, investments in innovation suffer from negative externalities, i.e. spillovers to other firms, and hence imitation could be induced. To preempt imitation firms may protect their inventions by means of intellectual property rights, such as patents. By taking out a patent, however, a firm also conveys information about the functioning of the invention to competitors. In this empirical paper, we highlight the trade-off of patenting by setting up a recursive system of equations on knowledge leakage and imitation that, among other factors, may be partly determined by firms' patenting activity. Thereby we contribute to the debate on the functioning of the contemporary patent system. We find that patenting firms are being less confronted with imitation. The effect of patents on the dissemination of R&D findings is, however, insignificant. Therefore, we conclude that patent disclosures do not significantly harm the appropriability conditions for inventions, but help to protect, at least partly, against imitation, as it has been originally envisaged by policy.
    Keywords: Innovation,R&D,Imitation,Dissemination,Patents
    JEL: O31 O33 O34 O38
    Date: 2021
  5. By: M. Keith Chen; Katherine L. Christensen; Elicia John; Emily Owens; Yilin Zhuo
    Abstract: While extensive, research on policing in America has focused on documented actions such as stops and arrests -- less is known about patrolling and presence. We map the movements of over ten thousand police officers across twenty-three of America's largest cities by combining anonymized smartphone data with station and precinct boundaries. Police spend considerably more time in Black neighborhoods, a disparity which persists after controlling for density, socioeconomics, and crime-driven demand for policing. Our results suggest that roughly half of observed racial disparities in arrests derive from disparities in exposure, and that supervisor (but not officer) diversity reduces this.
    Date: 2021–09
  6. By: Doug Anderson; Alexandra Flynn (University of Toronto)
    Abstract: This paper describes evolving Canadian municipal relationships with Indigenous Peoples and explores how such relationships may benefit from becoming more deeply reciprocal. The ways in which municipal governments conduct relationships with Indigenous Peoples can include meaningful consultation with First Nations and Indigenous Peoples on matters that affect them; having Indigenous representation on governing bodies; and entering into protocols and agreements with First Nations on lands bordering municipal boundaries and with Indigenous Peoples living in cities. In this paper we focus mainly on Canada’s largest cities. Although close to half of all Indigenous Peoples live in urban areas, cities have fewer legal obligations under Canadian law in respect of Indigenous Peoples than any other order of government. Like all Canadian orders of government, municipal authorities remain largely unaware of distinct Indigenous laws and perspectives. Canada’s Constitution Act limits municipalities to the exercise of authorities granted by provinces. Canadian law views provincial and federal governments as the Crown, while considerable uncertainty remains about the role of municipalities in IndigenousCrown relationships. We consider whether and how municipal governments are making meaningful changes to modify their governance models and forge reciprocal, respectful relationships with Indigenous Peoples and communities, in relation to distinct Indigenous ways of framing human responsibilities and rights.
    Keywords: Indigenous-municipal relations, Canada, municipal governance, duty to consult
    JEL: H77 H79
    Date: 2021–09
  7. By: Xiaoqing Chen (School of Economics and Management, Southeast University, Nanjing, Jiangsu, China, and IESEG School of Management, 3 rue de la Digue, F-59000 Lille, France); Kristiaan Kerstens (Univ. Lille, CNRS, IESEG School of Management, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France); Qingyuan Zhu (Nanjing University of Aeronautics & Astronautics, College of Economics and Management, Nanjing, China)
    Abstract: Swedish district courts have undergone a major mergers and acquisitions program between 2000 and 2010 to centralize activity in larger and fewer courts. The purpose of this contribution is to conduct an efficiency analysis of these courts to identify the eventual efficiency gains. Distinguishing mainly between technical and scale efficiency and determining the returns to scale of individual observations, we try to find the potential rationales behind this merger wave. We are to the best of our knowledge the first to combine traditional convex with nonconvex nonparametric frontier methods to calculate efficiency before and after the mergers. It turns out that the nonconvex methods provide a more cogent ex post explanation of this merger wave.
    Keywords: Horizontal merger, Technical efficiency, Scale efficiency, Data Envelopment Analysis, Free Disposal Hull
    Date: 2021–08
  8. By: Nakamura, Ryota; Yao, Ying
    Abstract: This paper estimates the causal effects of restricting cigarette availability on purchasing patterns. We design a research strategy that enables the estimation by leveraging the impact of an unforeseen discontinuation of products because of the 2011 Great East Japan Earthquake. We analyze nationally representative home scanner data in Japan and find that making certain products unavailable leads smokers to switch to products with less tar and nicotine and purchase 32 percent fewer cigarettes per month. As a result, the total amount of tar and nicotine in purchased cigarettes has decreased by 43 and 30 percentage points, respectively. Such effects persist over the years.
    Keywords: Tobacco consumption, Supply restriction, Product availability, Natural experiment, Japan
    JEL: D12 I12 I18
    Date: 2021–08
  9. By: Eberhartinger, Eva; Safaei, Reyhaneh; Sureth, Caren; Wu, Yuchen
    Abstract: This study examines the relation between risk-based tax audit strategies and corporate tax avoidance. We exploit OECD data across 54 countries on risk profiling, predictive modeling, and internal intelligence functions in tax administrations from 2014 to 2017 to investigate whether risk-based tax audits have an incremental effect on tax avoidance beyond enforcement. Our results suggest that the use of risk-based tax audits is associated with lower tax avoidance when controlling for tax enforcement, firm-specific, and country-specific factors. Cross-sectional tests indicate that risk-based tax audit strategies are effective tools to curb tax avoidance across firms of all sizes. The results of additional cross-sectional analyses indicate that risk-based tax audits are more effective in countries with low governance quality, high GDP, and low trust in governments. In additional tests, we use country-level data on tax administration performance and find evidence that countries with a risk-based audit strategy have lower costs of tax enforcement and improve the performance of tax authorities. Overall, our findings indicate that risk-based tax audit strategies have an incremental effect on attenuating firms' tax avoidance and increasing tax revenue.
    Keywords: tax audits,tax avoidance,tax compliance,tax enforcement,tax risk
    JEL: H25 H26 M41 M42 M48
    Date: 2021
  10. By: David Lewis; Ian Currie
    Abstract: This paper examines whether economic analysis can help provide firmer foundations for the adjudication of human rights claims in establishing monetary awards for injury to dignity and, in accommodation cases, better capturing benefits for society. In relation to injury to dignity, it explores the prospects for establishing an objective evidentiary baseline through a program of independent economic research. In the area of accommodation, the paper considers if the wider use of Cost-Benefit Analysis could help prevent undervaluation of accommodation and whether governments should help cover the incremental cost of accommodation in some cases.
    Keywords: Human Rights, Cost-Benefit Analysis, Adjudication, Dignity
    JEL: D63 I38 I31 J18 J24 J15 J6 K37
    Date: 2021–08
  11. By: Angélica Meinhofer; Allison E. Witman; Jesse M. Hinde; Kosali I. Simon
    Abstract: We studied the effect of marijuana liberalization policies on perinatal health with a multiperiod difference-in-differences estimator that exploited variation in effective dates of medical marijuana laws (MML) and recreational marijuana laws (RML). We found that the proportion of maternal hospitalizations with marijuana use disorder increased by 23% (0.3 percentage points) in the first three years after RML implementation, with larger effects in states authorizing commercial sales of marijuana. This growth was accompanied by a 7% (0.4 percentage points) decline in tobacco use disorder hospitalizations, yielding a net zero effect over all substance use disorder hospitalizations. RMLs were not associated with changes in newborn health. MMLs had no significant effect on maternal substance use disorder hospitalizations nor on newborn health and fairly small effects could be ruled out. In absolute numbers, our findings implied modest or no adverse effects of marijuana liberalization policies on the array of perinatal outcomes considered.
    JEL: I0
    Date: 2021–09
  12. By: Nicolas Gavoille; Anna Zasova
    Abstract: The interactions between minimum wage policy and tax evasion remain largely unknown. We study firm-level employment effects of a large and biting minimum wage increase in Latvia conditional on labor tax compliance. The Latvian labor market is characterized by the prevalence of envelope wages, i.e. unreported cash-in-hand complements to the official wage. We apply machine learning to classify firms between compliant and tax-evading using a unique combination of administrative and survey data. We then show that firms engaged in labor tax evasion are insensitive to the minimum wage shock. Our results suggest that these firms use wage underreporting as an adjustment margin, converting (part of) the envelope into legal wage. Increasing minimum wage contributes to tax rule enforcement, but this comes at the cost of negative employment consequences for compliant firms.
    Keywords: Minimum wage; Employment; Tax evasion
    JEL: J08 H26 E26
    Date: 2021–09–21
  13. By: Baiker, Laura; Bertola, Elena; Jelitto, Markus
    Abstract: Services is the fastest-growing sector of today's global economy and trade in services is the most dynamic segment of world trade. However, its potential remains constrained by a variety of barriers: trade costs are estimated to be almost double those in goods, and more than 40% of trade costs are accounted for by regulation-related factors. Regulatory measures related to the permission to supply a service, i.e. those related to licensing and qualifications requirements and procedures, and technical standards, can particularly affect service suppliers' ability to trade. With a view to mitigating the unintended trade-restrictive effects of such measures, since 2017, a group of Members has been negotiating a set of regulatory disciplines in the context of the Joint Initiative on Services Domestic Regulation. Since the launch of negotiations in the Joint Initiative at the margins of the 11th WTO Ministerial Conference, a number of delegations have approached the WTO Secretariat for assistance on assessing to what extent their domestic regulatory regimes are consistent with the disciplines on services domestic regulation that the Joint Initiative has developed ("SDR disciplines"), as well as to understand what potential benefits the implementation of such disciplines might bring to their economies. This Paper expands on the individual assistance provided to WTO Members and has the following three objectives: (i) to examine the prevalence of the SDR disciplines in regional and bilateral trade agreements; (ii) to evaluate to what extent Members have already implemented SDRrelated measures in their national regulatory frameworks; and (iii) to analyze the potential linkages between the application of the SDR disciplines and economic performance. Firstly, based on a sample of 74 agreements concluded by 151 Members, we show that the adoption of domestic regulatory disciplines in trade agreements is a fairly established practice, particularly among "new generation" agreements concluded after 2005. Almost 40% of the Members in our sample, across all income levels and regions, being participants of the Joint Initiative or not, have committed on average to at least half of the SDR disciplines. Secondly, we analyze the level of implementation of the SDR disciplines in national regulatory frameworks using a sample of 86 Members. Not only have Members signed on to the SDR disciplines in their trade agreements, but they have also undertaken substantive regulatory reforms that implement these measures at the national level. We find that more than half of the economies in our sample have implemented in their regulatory regimes at least two thirds of the SDR disciplines under study. Lastly, while our research does not claim to establish causal relationships, we provide initial insights on the potential linkages between the application of the SDR disciplines and various indicators of economic performance, including services value-added, share of services trade, participation in global value chains, and level of entrepreneurship.
    Keywords: services domestic regulation,trade in services,trade agreements,economic performance
    JEL: F13 F15 L8 K33
    Date: 2021

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