nep-law New Economics Papers
on Law and Economics
Issue of 2022‒09‒19
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Neutralizing the Tentacles of Organized Crime. Assessment of an Anti-Crime Measure in Fighting Mafia Violence By Anna Laura Baraldi; Erasmo Pagani; Marco Stimolo
  2. Quantifying Economic Reasoning in Court: Judge Economics Sophistication and Pro-business Orientation By Cao, Siying
  3. The Effects of Electronic Monitoring on Offenders and their Families By Grenet, Julien; Grönqvist, Hans; Niknami, Susan
  4. Does Legal Freedom Satisfy? By Berggren, Niclas; Bjørnskov, Christian
  5. Gendered Ageism and Disablism and Employment of Older Workers By Joanne S. McLaughlin; David Neumark
  6. Universal Early Childhood Education and Adolescent Risky Behavior By Michihito Ando; Hiroaki Mori; Shintaro Yamaguchi
  7. Identity in Court Decision-Making By Ahrsjö, Ulrika; Niknami, Susan; Palme, Mårten
  8. Share ownership and the introduction of no liability legislation in nineteenth-century Australia By Grant Fleming; Frank Liu; David Merrett; Simon Ville
  9. A legal-economic framework of electricity markets: Assessing Australia’s transition By Csereklyei, Zsuzsanna; Kallies, Anne
  10. Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies By Carlo Lombardo; Lucía Ramirez-Veira; Leonardo Gasparini
  11. Better Safe than Sorry: Toxic Waste Management after Unionization By Magnus Schauf; Eline Schoonjans
  12. Licensing in a Stackelberg industry, product differentiation, and welfare By Antelo, Manel; Bru, Lluís

  1. By: Anna Laura Baraldi (Department of Economics, University of Campania); Erasmo Pagani (Department of Law, University of Naples Federico II); Marco Stimolo (Department of Economics, University of Campania)
    Abstract: Organized crime reinforces its corrupting influence on politics through violent intimidation. Anti-crime measures that increase the cost of corruption but not of the exercise of violence might accordingly lead mafia-style organizations to retaliate by resorting to violence in lieu of bribery. On the other hand, anti-corruption measures might also induce criminal clans to go inactive, owing to the higher “entry barriers” to the “business” of influencing politics, which would reduce violence. To determine which of these possible effects is prevalent, we undertake an empirical assessment of the impact of city council dissolution for mafia influence as prescribed by Decree Law 164/1991 in discouraging violence against politicians in the period 2010-2019. Our difference-in-differences analysis shows that in the dissolved municipalities the enforcement of the Law reduces violence, the effect persisting for two electoral rounds. Also, we find spillover effects moderating violence in undissolved neighboring municipalities. These findings are robust to a series of endogeneity tests.
    Keywords: Organized Crime, Violence, Anti-corruption measures, Spillovers
    JEL: C25 D73 D78 I38 K42
    Date: 2022–07
  2. By: Cao, Siying
    Abstract: By applying computational linguistics tools to the analysis of US federal district courts' decisions from 1932 to 2016, this paper quantifies the rise of economic reasoning in court cases that range from securities regulation to antitrust law. I then relate judges' level of economic reasoning to their training. I find that significant judge heterogeneity in economics sophistication can be explained by attendance at law schools that have a large presence of the law and economics faculty. Finally, for all regulatory cases from 1970 to 2016, I hand code whether the judge ruled in favor of the business or the government. I find that judge economics sophistication is positively correlated with a higher frequency of pro-business decisions even after controlling for political ideology and a rich set of other judge covariates.
    Keywords: law and economics,judicial decision making,text as data
    JEL: K0 L5 Z1
    Date: 2022
  3. By: Grenet, Julien (Paris School of Economics, CNRS); Grönqvist, Hans (Linnaeus University, IFAU); Niknami, Susan (Swedish Institute for Social Research, Stockholm University)
    Abstract: Electronic monitoring (EM) is a popular instrument to reduce large prison populations. Evidence on the effects of EM on criminal recidivism is, however, limited and it is unclear how this alternative to incarceration affects the labor market outcomes of offenders. Moreover, little is known about potential spillover effects on family members. We study the introduction of EM in Sweden in 1997 wherein offenders sentenced to up to three months in prison were given the possibility to avoid entering prison by substituting to EM. Our difference-in-differences estimates comparing the change in the prison inflow rate of eligible offenders to that of non-eligible offenders with slightly longer sentences show that the reform dramatically decreased incarcerations. Our main finding is that EM lowers criminal recidivism and improves offenders’ labor market outcomes. There is also some evidence of improvements in the short and intermediate run outcomes of the children of the offenders. The main channels through which EM operates seem to be by allowing offenders to maintain regular work and potentially also by reducing employer discrimination. Our calculations suggest that the social benefits of EM are at least six to nine times larger than the fiscal savings from reduced prison expenditure. This makes the welfare improvements from EM potentially much greater than what has been previously recognized.
    Keywords: Electronic monitoring; Incarceration; Labor supply; Crime; Spillovers
    JEL: K42
    Date: 2022–08–01
  4. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Bjørnskov, Christian (Aarhus University, Denmark)
    Abstract: Much political conflict in the world revolves around the issue of how much freedom to accord people. Liberal democracies are characterized by, e.g., the rule of law and a strong protection of civil rights, giving individuals a great deal of legally guaranteed freedom to lead their lives as they see fit. However, it is not known whether legal freedom suffices to make people satisfied with freedom. Our study explores that issue by relating seven indicators of legal freedom to the satisfaction people express with their freedom of choice. Using a sample of 133 countries over the period 2008–2018, and taking a panel-data approach, we find no robust baseline relationship. However, when exploring conditional associations by interacting the indicators with social trust and income inequality, the rule of law is positively and increasingly related to satisfaction with freedom above and below a threshold level. Freedom of assembly is more positive for satisfaction with freedom the higher the GDP per capita and in democracies. Thus, for some types of legal freedom, formal legal institutions are complementary with culture, income and the political system in generating satisfaction with freedom.
    Keywords: Freedom; Satisfaction; Well-being; Happiness; Civil rights; Rule of law
    JEL: K10 K38 P10
    Date: 2022–08–31
  5. By: Joanne S. McLaughlin; David Neumark
    Abstract: Gendered discrimination based on age and disability is a pressing issue, because this discrimination can interfere with the goal of lengthening work lives, especially for older women. In the United States, the Age Discrimination in Employment Act and the Americans with Disabilities Act prohibit age and disability discrimination in employment, while Title VII of the Civil Rights Act bars discrimination against women. However, because gender and age (and disability) discrimination fall under different statutes, these laws may be inadequate to protect against discrimination based on gendered ageism and disablism. Legal rulings in the United States generally do not recognize intersecting claims – discrimination based on two or more protected characteristics – when those characteristics are covered by separate statutes. This may help explain the evidence that age discrimination is worse for women than for men. We discuss the theory and methods we can use to analyze these issues, and the relevant laws and their failure to protect women from gendered ageism. We review evidence on gendered age discrimination, and evidence on the effects of discrimination laws and how well they protect from intersectional discrimination. Finally, we discuss potential changes in policies that could better protect against gendered age discrimination.
    JEL: J14 J7
    Date: 2022–08
  6. By: Michihito Ando (Michihito Ando); Hiroaki Mori (Hiroaki Mori); Shintaro Yamaguchi (Shintaro Yamaguchi)
    Abstract: The evidence for the effects of early childhood education on risky behavior in adolescence is limited. This paper studies the consequences of a reform of a large-scale universal kindergarten program in Japan. Exploiting a staggered expansion of kindergartens across regions, we estimate the effects of the reform using an event study model. Our estimates indicate that the reform significantly reduced juvenile violent arrests and the rate of teenage pregnancy, but we do not find that the reform increased the high school enrolment rate. We suspect that improved non-cognitive skills can account for the reduction of risky behavior in adolescence.
    Keywords: early childhood education, crime, teenage pregnancy
    JEL: H52 I20 I28 J13 J24 K40
    Date: 2022–09
  7. By: Ahrsjö, Ulrika (Department of Economics, Stockholm University); Niknami, Susan (Swedish Institute for Social Research, Stockholm University); Palme, Mårten (Department of Economics, Stockholm University)
    Abstract: We explore the role of identity along multiple dimensions in high-stakes decisionmaking. Our data contain information about demographic and socioeconomic indicators for randomly assigned jurors and defendants in a Swedish court. Our results show that defendants are 15 percent less likely to get a prison sentence if they and the jurors belong to the same identity-forming groups. Socioeconomic background and demographic attributes are at least as important, and combining several identities produces stronger effects.
    Keywords: Crime
    Date: 2022–07–01
  8. By: Grant Fleming; Frank Liu; David Merrett; Simon Ville
    Abstract: The no liability company – where investors are not liable for uncalled parts of their shares - has been unique to Australasia. Deploying a large dataset, we provide the first empirical examination of the effects of this new corporate form on company formation and shareholding. Our focus is on Victorian goldmining, the earliest and most pervasive users of the no liability form. No liability companies largely replaced limited liability within a decade of the legislation in 1871, which was more rapid than the transition from unlimited to limited liability companies in several other nations. No liability companies attracted a broader occupational and locational range of investors beyond the mining industry and its districts, especially gentlemen and financiers. We conclude that investors believed no liability firms to be less risky because of the removal of call liabilities and the mitigation of previous regulatory failures.
    Keywords: Mining; goldmining; share ownership; Australia; company law; limited liability; no liability; investors; stock exchanges; occupations; Melbourne; investment booms.
    Date: 2022–08
  9. By: Csereklyei, Zsuzsanna; Kallies, Anne
    Abstract: Recent years have seen a surge in renewable generation investment in many countries, displacing traditional fossil-fuel generation at scale. The continuation of this clean energy transition is however threatened by outdated electricity market frameworks, which were not designed for large amounts of intermittent, zero-marginal cost generation. Clean energy transitions have amplified existing problems of liberalized wholesale markets and introduced new ones, including but not limited to maintaining system resilience and reliability and ensuring adequate future investment levels. Addressing these challenges will be central to a successful transition and requires a detailed understanding of the dynamic processes between electricity system objectives, legal frameworks, and market economics. We develop an integrated legal-economic model of electricity market design under transition conditions. The model proposes preferred pathways to proactively address major changes in electricity system objectives and the discrepancies between these objectives and market outcomes demonstrated on the example of Australia.
    Keywords: Electricity market economics, market frameworks, law and regulation
    JEL: K2 Q40 Q48
    Date: 2022
  10. By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP & CONICET); Lucía Ramirez-Veira (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET)
    Abstract: Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin America’s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We find evidence that the MW has a compression effect on the wage distribution of formal workers. The effect was particularly large during the 2000s, a decade of sustained growth and strong labor markets. In contrast, the effect seems to vanish in the 2010s, a decade of much weaker labor markets. We also find suggestive evidence of a lighthouse effect: the MW seems to have an equalizing effect also on the wage distribution of informal workers.
    JEL: J22 J31 J38 K31
    Date: 2022–09
  11. By: Magnus Schauf; Eline Schoonjans
    Abstract: studies the impact of organized labor on toxic waste management at US facilities between 1991 and 2020. If unions, as collective voice, bargain for worker benefits such as workplace safety and member health, their effect on toxic releases remains unclear due to a tradeoff. Reducing toxic waste releases has positive health and environmental effects but requires more and dangerous activities to handle waste after production. Using a regression discontinuity design on close-call union elections, we find a significantly negative effect of unionization on the sum of toxic waste recycling, energy recovery, and treatment at the facility site. In contrast, total toxic releases to air, land, and water increase after unionization. These e ects are more pronounced in states without right-to-work laws, for less toxic chemicals, and for non-heavy industries. Finally, we show that unionized facilities increase waste prevention activities through innovative product and process modifications and have less catastrophic releases. However, these effects cannot o set the reduction in waste handling, resulting in more waste releases. Our findings suggest that unions prioritize safety over sustainability and call upon managerial and governmental action to better align these two objectives.
    Date: 2022–08
  12. By: Antelo, Manel; Bru, Lluís
    Abstract: In a differentiated Stackelberg duopoly, we explore the licensing behaviour of an inside patent holder owning a cost-reducing innovation and that may play as a leader or follower in setting the output level in the marketplace. We find that, regardless of whether the licensor is the leader or the follower, the licensing contract always involves royalties: per-unit or ad-valorem (depending on the degree of product differentiation and the size of the innovation) when the licensor is the leading firm, and per-unit royalties (alone or combined with a fixed payment) when it is the follower. We also show that, as compared to the pre-licensing context, licensing by a market follower is never welfare reducing, and licensing by a market leader is only welfare reducing when the products are very close substitutes.
    Keywords: Stackelberg industry, licensing, differentiated products, per-unit and ad-valorem royalties, welfare
    JEL: L13 L24
    Date: 2022–04

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