nep-law New Economics Papers
on Law and Economics
Issue of 2021‒11‒22
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Financial inclusion and legal system quality: are they correlated? By Ozili, Peterson Kitakogelu
  2. Regulating big tech: From competition policy to sector regulation? By Budzinski, Oliver; Mendelsohn, Juliane
  3. Frustration, Euphoria, and Violent Crime By Rossi, Martin; Munyo, Ignacio
  4. Effects of COVID-19 Shutdowns on Domestic Violence in US Cities By Amalia R. Miller; Carmit Segal; Melissa K. Spencer
  5. Price effects of horizontal mergers: A retrospective on retrospectives By Stöhr, Annika
  6. The Right to Health and the Health Effects of Denials By Bhalotra, Sonia; Fernandez, Manuel
  7. Crime as Conditional Rule Violation By Christoph Engel
  8. TRAP'd Teens: Impacts of Abortion Provider Regulations on Fertility & Education By Jones, Kelly M.; Pineda-Torres, Mayra
  9. Trade Networks, Heroin Markets, and the Labor Market Outcomes of Vietnam Veterans By Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
  10. A Hard Look at “Soft” Cost‐control Measures in Healthcare Organizations: Evidence from Preferred Drug Policies in Germany By Avdic, Daniel; Blankart, Katharina
  11. Asylum Recognition Rates in Europe: Persecution, Policies and Performance By Hatton, Timothy J.
  12. The Effect of ACA Medicaid Expansions on Foster Care Admissions By Louis-Philippe Beland; Jason Huh; Dongwoo Kim
  13. Ways of taxing wealth: alternatives and interactions By Summers, Andrew
  14. Towards net zero carbon emissions: carbon pricing strategies and the role of innovative technologies By Ojo, Marianne; Dierker, Theodore

  1. By: Ozili, Peterson Kitakogelu
    Abstract: This study investigates the correlation between financial inclusion and legal system quality among developed countries from 2004 to 2012. The findings reveal a positive correlation between financial inclusion and legal system quality. The findings suggest that improvements in legal system quality goes hand in hand with improvements in the level of financial inclusion. More specifically, higher supply of ATM per 100,000 adults is correlated with stronger insolvency resolution framework among G7, European and non-European countries. Also, the number of bank branch per 100,000 adults is positively correlated with strong rule of law and legal rights in non-European countries. Also, the number of ATMs per 100,000 adults is positively correlated with strength of insolvency resolution framework and negatively correlated with the time it takes to resolve insolvency before, during and after the global financial crisis.
    Keywords: Law, development, financial inclusion, ATM, bank branch, legal rights, legal system, rule of law, insolvency resolution.
    JEL: G20 G21 G28 K00 K12 K23 K40 K42 K49
    Date: 2021–12
  2. By: Budzinski, Oliver; Mendelsohn, Juliane
    Keywords: big tech,digital economy,digital ecosystems,GAFAM,competition policy,antitrust,Digital Markets Act (DMA),sector-specific regulation,law and economics
    JEL: K21 K23 K24 L40 L50 L81 L86
    Date: 2021
  3. By: Rossi, Martin; Munyo, Ignacio
    Abstract: We exploit a series of natural experiments that use real crime data to investigate the effect of a violation of expectancies on violent crime. We study two types of violation of expectancies that generate the emotions of frustration and euphoria. Our empirical designs exploit differential expectations (as measured by the odds of soccer games in the betting market) while maintaining the outcome unchanged (a loss in a soccer game for frustration, a win in a soccer game for euphoria). We find that frustration is followed by a spike in violent crime whereas euphoria is followed by a reduction in violent crime. The two effects are concentrated in a narrow time window after the end of the game: one hour.
    Keywords: violation of expectancies; soccer; natural experiment; robbery; theft; aggression
    JEL: K42
    Date: 2021–11–07
  4. By: Amalia R. Miller; Carmit Segal; Melissa K. Spencer
    Abstract: We empirically investigate the impact of COVID-19 shutdowns on domestic violence using incident-level data on both domestic-related calls for service and crime reports of domestic violence assaults from the 18 major US police departments for which both types of records are available. Although we confirm prior reports of an increase in domestic calls for service at the start of the pandemic, we find that the increase preceded mandatory shutdowns, and there was an incremental decline following the government imposition of restrictions. We find no evidence that domestic violence crimes increased. Rather, domestic violence assaults declined significantly during the initial shutdown period and there was no significant change in intimate partner homicides in these months. Our results fail to support claims that shutdowns increased domestic violence and suggest caution before drawing inference or basing policy on calls data alone.
    JEL: I18 J12 J16 K14 K42 R28
    Date: 2021–10
  5. By: Stöhr, Annika
    Abstract: In this comprehensive review of ex-post merger studies price effects of horizontal transactions are evaluated. By combining and further analyzing the results of 52 retrospective studies on 82 mergers or merger-like transactions it can be shown that the industry alone is no strong indication for the direction of price-related merger effects. However, the "size" or "importance" of a transaction as well as market concentration pre-merger and change in concentration due to the transaction seem to have an impact on post-transaction price development.
    Keywords: Antitrust,Merger Control,Industrial Economics,Retrospective Studies,Ex-Post Studies,Competition Law Enforcement
    JEL: D49 K21 L13 L40
    Date: 2021
  6. By: Bhalotra, Sonia (University of Warwick); Fernandez, Manuel (Universidad de los Andes)
    Abstract: We investigate supply-side barriers to medical care in Colombia, where citizens have a constitutional right to health, but insurance companies impose restrictions. We use administrative data on judicial claims for health as a proxy for unmet demand. We validate this using the health services utilization register, showing that judicial claims map into large, pervasive decreases in medical consultations, procedures, hospitalizations and emergency care. This manifests in population health outcomes. We identify increases in mortality pervasive across cause, age and sex, with larger increases for cancer, individuals over the age of fty, women and the poor.
    Date: 2021
  7. By: Christoph Engel (Max Planck Institute for Research on Collective Goods)
    Abstract: Most of the time most individuals do not commit crime. Why? One explanation is deonto-logical. People abide by legal rules just because these are the rules. In this perspective, the power of normativity is critical. It is supported by experimental evidence. To an im-pressive degree, participants even abide by arbitrary, costly rules, in the complete absence of enforcement. Yet do they also do that if they learn that some of their peers violate the rule? The experiment shows that rule following is conditional on social information. The more peers violate the rule, the more participants are likely to do so as well, and the more severely the violation. This main finding replicates in a vignette study. The effect is most pronounced with speeding, weaker with tax evasion, and absent with littering. In the lab, social information has an effect whether it is framed as the incidence of rule violation or of rule following. If they have no explicit social information, participants condition choices on their beliefs. Even merely knowing that they are part of a group, without knowing how others behave, has an effect.
    Keywords: decision to engage in criminal behavior, normativity, deontological motives, rule following, social context, social information, conditional rule following
    Date: 2021–11–10
  8. By: Jones, Kelly M. (American University); Pineda-Torres, Mayra (Texas A&M University)
    Abstract: Targeted regulations of abortion providers (TRAP laws) are the fastest growing abortion restriction in the U.S. These often result in clinic closures, limiting abortion access. We study how women's exposure to these laws in adolescence affects their fertility and educational attainment. For this study, we codify the legal history of all TRAP laws ever implemented. We explore the impacts of TRAP laws on teen births using an event-study analysis and stacked differences-in-differences methodology to avoid issues of negative weighting inherent in two-way fixed effects approaches. Consistent with other evidence on abortion access, we find that impacts on births are large and robust for Black women. Black teen births in states that implemented TRAP laws increased by 3 percent relative to changes in states without these restrictions. We offer evidence that these impacts are driven by reductions in abortion access, abortion use, and contraception use among Black teens. We further document that adolescent exposure to TRAP laws has downstream impacts on education. We find that Black women first exposed to TRAP laws before age 18 are 1 to 3 percentage points less likely to initiate and complete college. This study documents the important role that abortion access plays in reducing the harmful economic impacts of unintended teen motherhood. The findings suggest that modern abortion restrictions are harming women's efforts at economic advancement and are perpetuating racial inequality.
    Keywords: fertility, education, abortion, adolescence, race
    JEL: J13 I24 I14 J15 J16
    Date: 2021–11
  9. By: Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
    Abstract: The role of ethnic immigrant networks in facilitating international trade is a well-established phenomenon in the literature. However, it is less clear whether this relationship extends to illegal trade and unauthorized immigrants. In this paper, we tackle this question by focusing on the case of the heroin trade and unauthorized Chinese immigrants in the early 1990s United States. Between mid-1980s and mid-1990s, Southeast Asia became the dominant source of heroin in the US. Heroin from this region was trafficked into the US by Chinese organized criminals, whose presence across the country can be approximated by the location of unauthorized Chinese immigrants. Instrumenting for the unauthorized Chinese immigrant enclaves in 1990 with their 1900 counterpart, we first show that Chinese presence in a community led to a sizeable increase in local opiates-related arrests, a proxy for local heroin markets. This effect is driven by arrests for sale/manufacturing of the drugs. Next, we examine the consequences of Chinese-trafficked heroin by looking at its impact on US Vietnam-era veterans - a group particularly vulnerable to heroin addiction in the early 1990s. Using a triple-difference estimation, we find mostly small but statistically significant detrimental effects on labor market outcomes of Vietnam veterans residing in unauthorized Chinese enclaves in 1990.
    Keywords: Trade networks,heroin markets,Vietnam veterans,labor market outcomes
    JEL: F16 F22 J15 K42
    Date: 2021
  10. By: Avdic, Daniel; Blankart, Katharina
    Abstract: Cost‐control interventions that target physicians’ clinical discretion are common in healthcare, but evidence on their efficacy is scarce; in particular for “soft” policies when liability is unlikely to be enforced by the regulator. We study the effectiveness of preferred drug policies (minimum prescription quotas of specific “preferred” drugs) in altering physicians practice styles within the high volume drug class of HMG‐CoA‐reductase inhibitors (statins) in the German statutory health insurance system. Using a nationally representative panel of ambulatory care physicians between 2011 and 2014, we exploit the decentralized institutional setting to estimate physician responses to variation in preferred drug policies across regional physician associations over time in a generalized difference‐in‐differences design. Results show that although the cost‐control mechanism increases average policy adherence, this effect is mainly driven by physicians with initially high use rates of preferred drugs. We argue that such misdirection may limit the policy’s usefulness in reducing inappropriate practice variation among healthcare providers.
    Keywords: Cost-control, Healthcare, Practice Style, Difference-in-differences
    Date: 2021–11–10
  11. By: Hatton, Timothy J. (University of Essex)
    Abstract: A minority of applicants for asylum in Europe gain some form of recognition as refugees, and this has been a controversial issue. From the early 2000s the EU introduced a series of directives to prevent a race to the bottom in asylum policies and to harmonise policy between destination countries but the results have not been fully assessed. In this paper I examine the determinants of recognition rates for asylum applicants from 65 origin countries to 20 European destinations from 2003 to 2017. The outcomes of the EU directives have been mixed, but taken together they are associated with increased recognition rates. These made a modest contribution to the trend increase in recognition rates most of which is due to increased political terror and human rights repression in origin countries. But differences between European countries remain large, even after accounting origin country composition and for differences in the adoption of EU directives. Some of this may be accounted for by differences in bureaucratic frameworks through which policy is administered.
    Keywords: refugees, asylum, recognition rates
    JEL: F51 J15 J61 K37
    Date: 2021–11
  12. By: Louis-Philippe Beland (Department of Economics, Carleton University); Jason Huh (Department of Economics, Rensselaer Polytechnic Institute); Dongwoo Kim (Department of Economics, Texas Christian University)
    Abstract: Recent papers have documented positive externalities of Medicaid expansions on several nonhealth related variables, such as crime, financial stress, child support, and child abuse.
    Keywords: Affordable Care Act, Health Insurance, Foster Care, Child Abuse
    JEL: I13 I18 J13 K36
    Date: 2021–08–12
  13. By: Summers, Andrew
    Abstract: In this paper, I examine the role of a wealth tax in the context of the UK's existing taxes on wealth. First, I discuss several ways in which the UK could be said to tax wealth already, and I set out two possible directions for reforming these taxes, highlighting policies that are merited under either approach. Second, I consider whether and under what circumstances a broad-based tax on the ownership of wealth – a ‘wealth tax’ – could be justified instead of or in addition to these reforms. Third, I address how a wealth tax should interact with other taxes, focusing on concerns regarding ‘double taxation’ and (conversely) proposals for an alternative minimum tax based on wealth. I conclude that there is a large degree of consensus amongst existing proposals to reform our current taxes on wealth, and that most of these reforms would be required whether or not a wealth tax is introduced as well.
    Keywords: capital gains tax; comprehensive income tax; income tax; inheritance tax; Mirrlees review; wealth tax; ES/L011719/1; International Inequalities Institute AFSEE COVID‐19 fund; Wiley deal
    JEL: H20 H24 H26 K34
    Date: 2021–10–25
  14. By: Ojo, Marianne; Dierker, Theodore
    Abstract: The 2021 COP 26 Summit held in Glasgow, has resulted, not only in groundbreaking agreements, but also the involvement of private sector investment, the participation of formidable alliances such as the Global Energy Alliance – and for the first time, the engagement of indigenous communities. Whilst ongoing negotiations and outcomes from the Summit appear promising, there are still concerns in relation to the lack of enforceability of agreements. This paper, not only aims to highlight the rationales underlying such concerns, but also consider the merits and applicability of innovative techniques and technologies – as well as notable progress and developments made during the ongoing Summit. The engagement of several economies in the asset purchasing programs and uncertainty in decision making by some in respect of when, how or whether to commence winding up activities, also bears several monetary policy implications. This could in turn, impact outcomes – both intended and unintended, in relation to carbon, and more specifically, oil pricing strategies – which are ideally targeted at mitigating carbon emissions, whilst fostering climate goals and objectives. Given the demands and pressures of governments and economies in deploying funds to households, businesses; central bank engagements in deciding how and when to wind down asset purchase programs, and the need by governments to focus on more urgent and pressing matters such as those related to health, education, in the light of ongoing global developments, how ready and willing are governments able to commit to environmental issues? Herein lies a role for the private sector and private sector investment.
    Keywords: COP 26; double counting; fossil fuels; renewable energy; oil pricing; monetary policy; inflation; innovative techniques; Article 6 of the Paris Agreement; transparency; disclosure; emissions gap; NDCs
    JEL: D8 F6 F64 G3 K2
    Date: 2021–11

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