nep-law New Economics Papers
on Law and Economics
Issue of 2023‒09‒25
seven papers chosen by
Yves Oytana, Université de Franche-Comté

  1. ALL IS NOT LOST: Organized Crime and Social Capital Formation By Paolo Buonanno; Irene Ferrari; Alessandro Saia
  2. Gender Differences in Judicial Decisions under Incomplete Information: Evidence from Child Support Cases By Roberto Asmat; Lajos Kossuth
  3. Antitrust Enforcement Increases Economic Activity By Tania Babina; Simcha Barkai; Jessica Jeffers; Ezra Karger; Ekaterina Volkova
  4. Simultaneous Decision Making of Juries: Evidence From the Paris Labor Court By Claudine Desrieux; Romain Espinosa; Michael Visser
  5. The Impact of Criminal Financial Sanctions: A Multi-State Analysis of Survey and Administrative Data By Keith Finlay; Matthew Gross; Carl Lieberman; Elizabeth Luh; Michael G. Mueller-Smith
  6. Efficiency vs. equity concerns in regulatory sandboxes By Crampes, Claude; Estache, Antonio
  7. Comments on the 2023 Draft Merger Guidelines: A Labor Market Perspective By Berger, David; Hasenzagl, Thomas; Herkenhoff, Kyle; Mongey, Simon; Posner, Eric A.

  1. By: Paolo Buonanno; Irene Ferrari (Department of Economics, University Of Venice CÃ Foscari; NETSPAR); Alessandro Saia (Department of Economics, University Of Bologna)
    Abstract: We investigate how a disruptive social event, namely the emergence of organized crime infiltration in the local government, shapes social capital. We exploit the dismissal of city councils infiltrated by organized crime and a novel and fine-grained measure of social capital in Italy. Using a difference-indifferences strategy, we show that municipalities’ dissolution is associated with a significant and sizable increase in social capital. We document the mechanisms through which the presence of organized crime affects social capital, including trust diversion, changes in civic engagement, and its impact on local institutions and governance.
    Keywords: organized crime, social capital, Italy, 5 per Mille
    JEL: A13 D73 H71 K42 Z18
    Date: 2023
  2. By: Roberto Asmat (Vienna University of Economics and Business); Lajos Kossuth (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We compare decisions by female and male judges in child support trials where a judge decides on the child support amount to be paid by the father. Leveraging the random assignment of cases to judges, we show that female judges set lower child support awards. We find no evidence that this gap is explained by pervasive views on traditional gender norms, nor by female and male judges pursuing alternative judicial goals. Instead, we offer a new perspective on gender differences in judicial decision-making by focusing on cases where the defendant’s income is non-observable due to labor market informality. In these cases, judges must form beliefs about the income before deciding on a child support award. Eliciting such beliefs, we find that female judges rely less on the plaintiff’s claim to form beliefs about the defendant’s income, which explains the gender gap in child support awards.
    Keywords: Gender, judicial decisions, informality.
    JEL: J16 J46 K15 K36
    Date: 2023–05
  3. By: Tania Babina; Simcha Barkai; Jessica Jeffers; Ezra Karger; Ekaterina Volkova
    Abstract: We hand-collect and standardize information describing all 3, 055 antitrust lawsuits brought by the Department of Justice (DOJ) between 1971 and 2018. Using restricted establishment-level microdata from the U.S. Census, we compare the economic outcomes of a non-tradable industry in states targeted by DOJ antitrust lawsuits to outcomes of the same industry in other states that were not targeted. We document that DOJ antitrust enforcement actions permanently increase employment by 5.4% and business formation by 4.1%. Using an event-study design, we find (1) a sharp increase in payroll that exceeds the increase in employment, meaning that DOJ antitrust enforcement increases average wages, (2) an economically smaller increase in sales that is statistically insignificant, and (3) a precise increase in the labor share. While we cannot separately measure the quantity and price of output, the increase in production inputs (employment), together with a proportionally smaller increase in sales, strongly suggests that these DOJ antitrust enforcement actions increase the quantity of output and simultaneously decrease the price of output. Our results show that government antitrust enforcement leads to persistently higher levels of economic activity in targeted industries.
    JEL: E24 J21 K21 L4 L40
    Date: 2023–08
  4. By: Claudine Desrieux (CRED - Centre de Recherche en Economie et Droit - Université Paris-Panthéon-Assas); Romain Espinosa (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique, CRED - Centre de Recherche en Economie et Droit - Université Paris-Panthéon-Assas); Michael Visser (Centre de Recherche en Économie et STatistique (CREST))
    Abstract: This paper analyzes the decisions made by juries at the Paris Labor Court. These juries (made up of two judges representing workers' unions and two representing employers' federations) decide how much money defendants (employers) should pay to plaintiffs (employees). Multiple cases are typically examined during a court session, and the jury then decides simultaneously how each plaintiff is to be compensated after all cases have been heard. We exploit the quasi-random assignment of cases and juries to sessions and estimate simultaneous Tobit models, accounting thereby for the mass at zero of the awarded amount and the simultaneous nature of the decision process. The awarded amount is not affected by the (average) amount awarded to other plaintiffs, suggesting that in this respect a simultaneous decision process is preferable to a sequential one (wherein decisions have been shown to be affected by path dependency). Furthermore, the awarded amount is significantly higher when one or both employee representatives are left-wing orientated, or if the jury is headed by a judge from a workers' union. Finally, plaintiffs get less money when they are examined in sessions containing relatively many cases.
    Keywords: Labor dispute, simultaneous judicial decision-making
    Date: 2022–11–17
  5. By: Keith Finlay; Matthew Gross; Carl Lieberman; Elizabeth Luh; Michael G. Mueller-Smith
    Abstract: We estimate the impact of financial sanctions in the U.S. criminal justice system using nine distinct natural experiments across five states. These regression discontinuity designs capture a range of enforcement levels ($17–$6, 000) and institutional environments, providing robust causal evidence and external validity. We leverage survey and administrative data to consider a variety of short and long-term outcomes including employment, recidivism, household expenditures, spousal spillovers, and other self-reported measures of well-being. We find consistent, robust evidence of precise null effects on the population, including ruling out long-run impacts larger than -$347–$168 in annual earnings and -0.002–0.01 in annual convictions.
    JEL: H72 J24 K42
    Date: 2023–08
  6. By: Crampes, Claude; Estache, Antonio
    Abstract: The paper makes the case for a more systematic ex-ante assessment of the distribution of gains and losses from efficiency enhancing innovations that regulatory sandboxes are expected to test. It shows how a prior formal modelling of tests can inform the regulators on the possible need to control better upfront in the design of the sandbox for some otherwise underestimated but predictable distributional effects. Failing to do so is likely to lead to underestimate efficiency-equity trade-offs and other distributional issues, across stakeholders or within groups of stakeholders. Simple Industrial Organization models will often suffice to identify the potential issues at an early stage and allow better sandboxes designs and hence more reliable policy relevant results.
    Keywords: Regulatory sandboxes; innovation; governance; anti-trust; regulation; efficiency; equity; quality standards
    JEL: K20 K21 K23 L12 L13 L15 L51 O31 O33
    Date: 2023–09–07
  7. By: Berger, David (Duke University); Hasenzagl, Thomas (University of Minnesota); Herkenhoff, Kyle (University of Minnesota); Mongey, Simon (Federal Reserve Bank of Minneapolis); Posner, Eric A. (University of Chicago)
    Abstract: The DOJ and FTC clarify the role of labor market power ("monopsony") in the 2023 draft merger guidelines. The draft states in Guideline 11 that the structural presumption threshold applies to labor market concentration, while also suggesting that a stricter threshold may be warranted in labor markets. The post-merger Herfindahl-Hirschman Index (HHI) that defines a highly concentrated market is 1800, which is lower, and so stricter, than the 2010 guidelines. We provide five comments on the draft guidelines based on our recent work Berger, Hasenzagl, Herkenhoff, Mongey, and Posner (2023). (1) Explicitly addressing monopsony in the draft guidelines is grounded in economic theory and empirical research. (2) Workers benefit from the lower threshold for highly concentrated markets. (3) The narrow nature of labor markets and high degree of monopsony power in the U.S. may warrant an even lower threshold. For example, merger simulations indicate that workers would benefit if the agencies lowered the HHI threshold further—to 1500 or 1000. (4) Worker welfare is central to the 2023 draft guidelines but the language is not always clear about this. The guidelines should make clear that degradations of "worker welfare" or "total compensation" indicate anticompetitive effects. (5) Dominant firms that can slow wage growth – but not freeze or cut wages – are subject to Guideline 7.
    Keywords: mergers, monopsony, labor market power, concentration
    JEL: J42 G34 K21 L4
    Date: 2023–08

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