nep-law New Economics Papers
on Law and Economics
Issue of 2023‒05‒01
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Murphy's Law or Luck of the Irish? Disparate Treatment of the Irish in 19th Century Courts By Anna Bindler; Randi Hjalmarsson; Stephen Machin; Melissa Rubio-Ramos
  2. On the Law of the Household: The Principles Used by Parents in Disciplining Their Children By Steven Shavell
  3. The Initial and Dynamic Effects of the COVID-19 Pandemic on Crime in New Zealand By Lydia Cheung; Philip Gunby
  4. Separability & Permissiveness for Separation of Powers By Mughal, Adil Ahmad
  5. Non-compete Agreements in a Rigid Labour Market: The Case of Italy By Boeri, Tito; Garnero, Andrea; Luisetto, Lorenzo Giovanni
  6. The Cost of Privacy. The Impact of the California Consumer Protection Act on Mortgage Markets. By Manish Gupta; Danny McGowan; Steven Ongena
  7. Breaking the marriage trap: unilateral divorce and its effects on labor supply of married women By Alonso-Borrego, César; Pomares Varo, Gema
  8. State Policies for Farm Animal Welfare in Production Practices of U.S. Livestock and Poultry Industries: An Overview By Ufer, Danielle
  9. The Limitations of Overtime Limits to Reduce Long Working Hours: Evidence from the 2018-2021 Working Time Reform in Korea By Carcillo, Stéphane; Hijzen, Alexander; Thewissen, Stefan
  10. Measuring Fair Competition on Digital Platforms By Lukas J\"urgensmeier; Bernd Skiera
  11. Are Older Mortgage Applicants More Likely to Be Rejected? By Natee Amornsiripanitch
  12. Fighting Free with Free: Freemium vs. Piracy By Antoine Dubus; Christine Halmenschlager; Patrick Waelbroeck

  1. By: Anna Bindler (University of Cologne and University of Gothenburg); Randi Hjalmarsson (University of Gothenburg); Stephen Machin (London School of Economics and CEP); Melissa Rubio-Ramos (University of Cologne)
    Abstract: Using data on 100 years of 19th century criminal trials at London’s Old Bailey, this paper offers clear evidence of disparate treatment of Irish-named defendants and victims by English juries. We measure surname Irishness and Englishness using place of birth in the 1881census. Irish-named defendants are 11% less likely to plea, 3% more likely to be convicted by the jury, and 16% less likely to receive a jury recommendation for mercy. These disparities are: (i) largest for violent crimes and for defendants with more distinctive Irish surnames; (ii) robust to case characteristic controls and proxies for signals associated with Irish surnames (social class, Irish county of origin, criminality); (iii) particularly visible for Irish defendants in cases with English victims; and (iv) spill-over onto English-named defendants with Irish codefendants. Disparate treatment is first visible in the 1830s, after which it grows, then persists through to the end of the century. In particular, the gap in jury conviction rates became larger during the twenty years after the Irish Potato Famine-induced migration to London. We do not find evidence, however, that the first bombing campaign of the Irish Republican Brotherhood (in 1867 and the 1880s) further exacerbated these disparities.
    Keywords: Irish, crime, criminal law, discrimination, economic history
    JEL: K42 K14 J15 N33 N93
    Date: 2023–04
  2. By: Steven Shavell
    Abstract: In this article I first describe the basic principles that parents employ in disciplining their children. The description is based on a survey of parents, the major results of which are that parental sanctions are premised on wrongdoing—not on the mere causation of harm; that parental sanctions tend to be greater when wrongdoing results in harm than when it does not; that parental sanctions for intentionally harmful conduct exceed those for negligence; and that parental sanctions are not raised when the probability that wrongdoing would be discovered is low. I then develop a theory to explain the principles of discipline as functional for parents. The kernel of the theory is that the rules of discipline maximize the expected utility of parents—assuming that the utility of parents is reduced by the occurrence of harm and also reflects the well–being of their children. After elaborating the theory, I comment on several related issues, including the possible influence of childhood experience on our preferences as adults over legal rules; and I remark on the interpretation of the similarity between the principles of criminal law and those applied by parents in disciplining their children.
    JEL: D01 K00 K1 K10 K13 K14 K41
    Date: 2023–03
  3. By: Lydia Cheung; Philip Gunby (University of Canterbury)
    Abstract: We use seasonal ARIMA methods to study the imposition and removal of national uniform social distancing restrictions in response to Covid-19 in New Zealand for six crime types in six cities. We then use the estimated models to forecast counterfactual crime trajectories. Novel elements include cleanly defined lockdown periods, two distinct lockdowns with meaningful gaps between them, and sizable periods after each one to allow for dynamics. We find that social restrictions initially lower offending, subsequent lockdowns have smaller impacts on offending, “bounce back” occurs in criminal offending after their removal, and bounce back is faster from subsequent lockdowns.
    Keywords: COVID-19; lockdown; crime; counterfactual; bounce back
    JEL: C22 H75 K14 K42
    Date: 2023–03–01
  4. By: Mughal, Adil Ahmad
    Abstract: This paper gives a theoretical proof for a question of constitutional law namely the principle of the separation of powers (SP). By defining a democratic process to be permissive (P) and separable (S) it proves that SP is a democratic, S & P, outcome.
    Keywords: constitutional law; separation of powers; separability; permissiveness; α-stability; the Supreme Court of Pakistan
    JEL: B52 C0 C1 D6 D63 D7 D72 K1 K10 K4 K40
    Date: 2023–03–29
  5. By: Boeri, Tito (Bocconi University); Garnero, Andrea (OECD); Luisetto, Lorenzo Giovanni (University of Michigan)
    Abstract: Non-compete clauses (NCCs) limiting the mobility of workers have been found to be rather widespread in the US, a flexible labour market with large turnover rates and a limited coverage of collective bargaining. This paper explores the presence of such arrangements in a rigid labour market, with strict employment protection regulations by OECD standards and where all employees are, at least on paper, subject to collective bargaining. Based on a representative survey of employees in the private sector, an exam of collective agreements and case law, we find that in Italy i) collective agreements play no role in regulating the use of NCCs while the law specifies only the formal requirements, ii) about 16% of private sector employees are currently bound by a NCC, iii) NCCs are relatively frequent among low educated employees in manual and elementary low paid occupations having no access to any type of confidential information, and iv) in addition to NCCs, a number of other arrangements limit the post-employment activity of workers. Many of the NCCs do not comply with the minimum requirements established by law and yet workers do not consider them as unenforceable and appear to behave as they were effective. Even when NCCs are unenforceable they appear to negatively affect wages when they are introduced without changing the tasks of the workers involved. Normative implications are discussed in the last section of the paper.
    Keywords: non-compete clauses, monopsony, labour market concentration
    JEL: J31 J41 J42 L40
    Date: 2023–03
  6. By: Manish Gupta (Nottingham University Business School); Danny McGowan (University of Birmingham); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))
    Abstract: We study how the introduction of a law protecting consumer data privacy affects the cost of credit in the US mortgage market. Our estimates reveal that the California Consumer Protection Act increases loan spreads charged by banks by 8 basis points but that it has no effect on the fixed origination costs charged to borrowers. In contrast, nonbanks do not charge more, possibly because they often resell to government-sponsored enterprises thereby minimizing their compliance costs. Banks also reduce their supply of credit more in lower-income areas, consistent with more informationally intense data collection practices there potentially exposing them to larger legal costs. In sum, our findings suggest that banks pass the CCPA compliance costs to borrowers through higher interest rates and reduce their legal exposure by curtailing credit where more data need to be collected.
    Keywords: Consumer Data Privacy, Shadow Banks, Mortgages, Regulatory Costs
    JEL: D12 G21 G23 G28
    Date: 2023–03
  7. By: Alonso-Borrego, César; Pomares Varo, Gema
    Abstract: We assess the impact of the 2005 divorce law reform in Spain, which reduced the time length and the costs of marriage termination, on the labor market outcomes of married women. We use independent cross sections of the Spanish Labor Force Survey between 2001 and 2009. As the reform affected married couples but not unmarried couples, we undertake a differences-in-differences approach to estimate the causal effect. Our results show that the reform substantially increased the participation and the occupation rates of married women by 4 and 3 percentage points, respectively, but reduced their average working hours by 5 percent. This latter result comes along with a large increase in part time employment due to the reform. The effects weremore pronounced for women without young children, with low education levels, and living in provinces where separate property was the default marital regime.
    JEL: J22 J12 J16 K36 C21 D19
    Date: 2023–04–20
  8. By: Ufer, Danielle
    Abstract: Since 2002, 14 U.S States have passed and implemented policies addressing practices that can impact farm animal welfare. The most common policies directly ban confinement practices within a State’s pork, egg, and veal industries or prohibit the sale of products from noncompliant operations. Proposals for future changes are also beginning to target beef and dairy industries. As these policies become increasingly common across States, their influence on animal product industries, markets, and international trade opportunities grows. This report describes the current state of these policies, the extent of their implementation and geographic coverage, and the legal environment and challenges these policies have faced. State policies directly cover a relatively small share of operations and production, but retail sales restrictions can reach beyond State borders to affect U.S. animal product industries more broadly and create market implications for U.S. imports and exports.
    Keywords: Agricultural and Food Policy, Farm Management, Industrial Organization, Livestock Production/Industries, Production Economics
    Date: 2022–12–15
  9. By: Carcillo, Stéphane (OECD); Hijzen, Alexander (OECD); Thewissen, Stefan (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This paper provides a first assessment of the causal impact of the 2018-2021 reform in Korea meant to combat its long working-hour culture. The reform consists of lowering the statutory limit on total weekly working hours from 68 to 52. We apply a difference-in-difference approach in which we take advantage of the stepwise implementation of the reform by firm size using individual-level data. We present three main findings. First, the introduction of the 52-hour limit reduced but far from eliminated the incidence of working more than 52 hours. Second, there is some evidence that the introduction led to a reallocation of working hours, with more employees shifting from working fulltime to working overtime within the new limit (41-52 hours). Third, and more tentatively, this reallocation more likely took place within firms to account for fewer overtime hours worked by their employees, rather than within households to compensate for any income effects. Overall, our results show that a lower statutory limit can help to lessen a long working-hour culture, but is an insufficient measure by itself to fully eradicate it.
    Keywords: working time regulation, working hours, time use, labour legislation, overtime, reallocation
    JEL: J16 J22 K31
    Date: 2023–03
  10. By: Lukas J\"urgensmeier; Bernd Skiera
    Abstract: Digital platforms use recommendations to facilitate the exchange between platform actors, such as trade between buyers and sellers. Platform actors expect, and legislators increasingly require that competition, including recommendations, are fair - especially for a market-dominating platform on which self-preferencing could occur. However, testing for fairness on platforms is challenging because offers from competing platform actors usually differ in their attributes, and many distinct fairness definitions exist. This article considers these challenges, develops a five-step approach to measure fair competition through recommendations on digital platforms, and illustrates this approach by conducting two empirical studies. These studies examine Amazon's search engine recommendations on the Amazon marketplace for more than a million daily observations from three countries. They find no consistent evidence for unfair competition through search engine recommendations. The article also discusses applying the five-step approach in other settings to ensure compliance with new regulations governing fair competition on digital platforms, such as the Digital Markets Act in the European Union or the proposed American Innovation and Choice Online Act in the United States.
    Date: 2023–03
  11. By: Natee Amornsiripanitch
    Abstract: As the U.S. population ages and lifespans increase, it is important to understand how aging affects an individual’s ability to access credit. Older homeowners tend to have more financial resources and better credit scores than their younger counterparts, so one would expect that they could borrow more easily. But is that true? This brief, which is based on a recent paper, is the first of a two-part series that looks at the relationship between age and mortgage outcomes. This initial brief uses confidential Home Mortgage Disclosure Act (HMDA) data to study the relationship between age and the probability of being denied a mortgage application. The second brief will examine the relationship between age and the interest rate charged on mortgages. The discussion proceeds as follows. The first section briefly outlines the extent to which a borrower’s age can legally be considered in credit decisions. The second section describes the data, which focus on rate-and-term refinance mortgages for single applicants, and the methodology, which relates the probability of rejection to age and a host of control variables. The third section presents the results, which show that rejection rates rise consistently with age. And the magnitude is large; applications for the three oldest age groups are 1-3 percentage points more likely to be rejected than those of younger applicants. These numbers equal or exceed the marginal rejection rates for Black and Hispanic applicants. The fourth section offers some possible reasons for this relationship: the underwriters frequently cite “insufficient collateral, †but the underlying issue may be mortality risk, which is tightly associated with prepayment, default, and recovery risks. The final section concludes that while the relationship between age and rejection is large and robust, it does not necessarily indicate that lenders are violating fair lending legislation. First, the regulations allow lenders to consider borrower’s age under some circumstances. Second, although the equation controls for many observable characteristics, the results should be viewed as an association between age and rejection – not a causal relationship. Third, mortality risk has real economic implications for lenders for which they might require additional collateral. Regardless of the reason, however, it is important for older individuals to know that they are more likely to be denied credit.
    Date: 2023–02
  12. By: Antoine Dubus (D-MTEC - Department of Management, Technology, and Economics [ETH Zürich] - ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]); Christine Halmenschlager; Patrick Waelbroeck
    Abstract: In this article, we show how freemium business models can deter piracy. We analyze a simple freemium model in which a firm offers both a free version and a premium version. The firm can restrict the use of the free version. Consumers can choose between the free and the premium version, but can also get an illegal digital copy. More restrictions can increase the number of premium users but divert other users to piracy. On the contrary, fewer restrictions deter online piracy. We show that with a low level of piracy, the firm sets a high level of restrictions on the free version, which makes the traditional premium business model more profitable than the freemium model. We therefore challenge the idea that strong copyright laws are necessary to protect digital markets. We argue that there are market solutions to fight free with free that better segment consumer audiences according to their willingness to pay for digital music.
    Keywords: Online piracy, versioning, freemium, streaming, copyright, music
    Date: 2023–02–16

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