nep-law New Economics Papers
on Law and Economics
Issue of 2023‒03‒06
five papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Political Campaigning, and Racial Discrimination in Arrests for Drugs. By Francesco Barilari; Diego Zambiasi
  2. Who should hold bail-inable debt and how can regulators police holding restrictions effectively? By Mecatti, Irene; Tröger, Tobias
  3. Effectiveness and supply effects of high-coverage rent control policies. By Jordi Jofre-Monseny; Rodrigo Martínez-Mazza; Mariona Segú
  4. Animal Protection and Information Avoidance By Völker, Richard; Gruener, Sven
  5. The Value of a Green Card in the U.S. Marriage Market: A Tale of Chain Migration? By Bansak, Cynthia; Dziadula, Eva; Zavodny, Madeline

  1. By: Francesco Barilari (Trinity College Dublin); Diego Zambiasi (Newcastle University)
    Abstract: In this paper we show that political campaigning can influence the behavior of law enforcement officers. We follow monthly arrests for 1383 police agencies in 40 American States from January 1984 to December 1990. During these years the Presidents of the United States developed a strong rhetoric against drug abuse. The main target of the presidential rhetoric was crack cocaine, a drug that the media associated with Blacks. We implement both a difference in differences and a reduced-form-Bartik-type approach to test if exposure to the presidential rhetoric affected the behavior of law enforcement officers. We generate a novel measure of the intensity of the presidential rhetoric against drug abuse by running a topic modelling analysis of all the public papers of Presidents Reagan and Bush. We find that arrests for crack cocaine of Blacks increased more in counties more exposed to the presidential rhetoric against drug abuse --even when accounting for state specific policies and baseline differences in county characteristics--, while we find no effect for Whites. We find qualitatively similar results when considering the effect of Reagan's political rallies.
    Keywords: Crackcocaine, Politicalcampaigning, Racialdiscrimination
    JEL: D72 J15 K42 P00
    Date: 2023–02
  2. By: Mecatti, Irene; Tröger, Tobias
    Abstract: This paper analyses the demand-side prerequisites for the efficient application of the bail-in tool in bank resolution, scrutinises whether the European bank crisis management and deposit insurance (CMDI) framework is apt to establish them, and proposes amendments to remedy identified shortcomings. The first applications of the new European CMDI framework, particularly in Italy, have shown that a bail-in of debt holders is especially problematic if they are households or other types of retail investors. Such debt holders may be unable to bear losses, and the social implications of bailing them in may create incentives for decision makers to refrain from involving them in bank resolution. In turn, however, if investors can expect resolution authorities (RAs) to behave inconsistently over time and bail-out bank capital and debt holders despite earlier vows to involve them in bank rescues, the pricing and monitoring incentives that the crisis management framework seeks to invigorate would vanish. As a result, market discipline would be suboptimal and moral hazard would persist. Therefore, the policy objectives of the CMDI framework will only be achieved if critical bail-in capital is not held by retail investors without sufficient lossbearing capacity. Currently, neither the CMDI framework nor capital market regulation suffice to assure that this precondition is met. Therefore, some amendments are necessary. In particular, debt instruments that are most likely to absorb losses in resolution should have a high minimum denomination and banks should not be allowed to selfplace such securities.
    JEL: G01 G18 G21 G28 K22 K23
    Date: 2023
  3. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Rodrigo Martínez-Mazza (Research, Uppsala Unversity and IEB); Mariona Segú (CY Cergy Paris Université)
    Abstract: Concerns related to housing affordability are widespread in cities worldwide, and discussions about adopting rent control policies abound. This paper studies the effects of a rent control policy adopted in Catalonia in September 2020 that applies to some but not all municipalities. The policy virtually covers all the rental market and forces ads and tenancy agreements to specify the applicable rent cap to ensure enforcement. In order to identify the causal effect of the rent control regulation, we implement difference-in-differences regressions and event-study designs and analyze average rents and the number of tenancy agreements signed. Our results indicate that the regulation reduced average rents paid by about 6%. However, this price drop did not lead to a reduction in the supply of housing units in the rental market. We implement several robustness tests to address several identification concerns related to Covid-19. Our results suggest that rent control policies can be effective in reducing rental prices and do not necessarily shrink the rental market.
    Keywords: Rent Control, Housing, Public Policy Evaluation, Event Study
    JEL: R52 R31 H70
    Date: 2022
  4. By: Völker, Richard; Gruener, Sven
    Abstract: Social scientists are increasingly interested in information avoidance (IA)—the active decision to refrain from information. However, processing information on animal protection in German livestock systems has not been systematically studied before. We close this gap by conducting a web-based survey in Germany with a focus on abdicating responsibility as a potential predictor of IA. As suggested in psychology, we measure IA with the help of several items to reduce measurement error. In our study, both the “sense of responsibility for animal protection” and the “consciousness of animal protection issues” were negatively associated with IA. This contradicts previous studies (e.g., in medicine, food consumption) in which people avoid information that they expect to trigger negative emotions. Our results help to better understand possible market failures (e.g., asymmetric information, moral hazard) and indicate that providing people with more information may have the potential to further increase legal animal pro-tection standards.
    Date: 2023–02–01
  5. By: Bansak, Cynthia (St. Lawrence University); Dziadula, Eva (University of Notre Dame); Zavodny, Madeline (University of North Florida)
    Abstract: This study examines the impact of having a clear path to lawful permanent resident status, or a "green card, " and naturalized citizenship on marital status and spousal characteristics among Chinese immigrants in the United States. A series of U.S. policy changes in the early 1990s made all mainland Chinese immigrants already present in the country eligible for a green card. We examine the effect of those policy changes on Chinese immigrants' marriage market outcomes relative to other East Asian immigrants. Using 1990 and 2000 U.S. Census data, we find that the share of Chinese immigrants who are married increased after they became automatically eligible for a green card. In particular, highly educated Chinese immigrants became relatively more likely to be married with a spouse living with them and relatively less likely to be married with a spouse living elsewhere. This pattern suggests that some Chinese spouses immigrated after their husband or wife received legal status, or spousal chain migration occurred. We also find that highly educated Chinese immigrants benefited in the marriage market in terms of spousal education and earnings, but less-educated Chinese immigrants did not. Meanwhile, less-educated Chinese-born women became relatively more likely to marry a U.S. native.
    Keywords: immigration, marriage markets, assortative matching, legal status, China
    JEL: J12 J15 K37
    Date: 2023–01

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