nep-law New Economics Papers
on Law and Economics
Issue of 2024‒03‒18
eight papers chosen by
Yves Oytana, Université de Franche-Comté

  1. The attenuation of legal change By Luigi Alberto Franzoni
  2. Estimating the returns to occupational licensing: evidence from regression discontinuities at the bar exam By Omar Bamieh; Andrea Cintolesi; Mario Pagliero
  3. Data, Privacy Laws and Firm Production: Evidence from the GDPR By Mert Demirer; Diego Jimenez-Hernandez; Dean Li; Sida Peng
  4. Norms among heterogeneous agents: a rational-choice model By Zdybel, Karol B.
  5. Innovation, information, lobby and tort law under uncertainty. By Julien Jacob; Caroline Orset
  6. Unveiling Shadows: The Impact of Unemployment on Child Maltreatment By Brown, Dan; De Cao, Elisabetta
  7. Who is at risk of experiencing violence and has it changed overtime? By Cooper, Kerris; Obolenskaya, Polina
  8. Improvements in Schooling Opportunities and Teen Births By Garcez, Lucas N.; Padilla-Romo, María; Peluffo, Cecilia; Pineda-Torres, Mayra

  1. By: Luigi Alberto Franzoni
    Abstract: This chapter, forthcoming in the Research Handbook on Law and Time (F. Fagan & S. Levmore eds., Edward Elgar 2024), offers a contribution to the economics of legal transition. It argues that the lawmaker should mitigate the burden generated by the risk of legal change by avoiding “extreme” decisions. The chapter puts the attenuation policy in perspective and compares it to other transition tools.
    JEL: K10
    Date: 2024–02
  2. By: Omar Bamieh (University of Vienna); Andrea Cintolesi (Bank of Italy); Mario Pagliero (University of Turin and Collegio Carlo Alberto)
    Abstract: We estimate the monetary returns to occupational licensing of Italian lawyers. To enter the legal profession in Italy, lawyers must pass a written and an oral exam featuring sharp discontinuities in the passing grade. Focusing on a subgroup of Italian law graduates taking the bar exam in Turin (a city in Northwest Italy), we exploit the sharp discontinuity generated by the bar exam to compare individuals who marginally pass and fail the bar exam and compare their earnings up to 19 years since their first attempt at the bar exam. We find that individuals with a licence to practice law earn, on average, euro 21, 000 gross more per year than individuals without a license. These returns are positive in each year of the analysis, increase up to the tenth year and then decrease.
    Keywords: labour market regulation, occupational licensing, earnings, legal market, bar exam
    JEL: J08 J44 L84 L50
    Date: 2024–02
  3. By: Mert Demirer; Diego Jimenez-Hernandez; Dean Li; Sida Peng
    Abstract: By regulating how firms collect, store, and use data, privacy laws may change the role of data in production and alter firm demand for information technology inputs. We study how firms respond to privacy laws in the context of the EU’s General Data Protection Regulation (GDPR) by using seven years of data from a large global cloud-computing provider. Our difference-in-difference estimates indicate that, in response to the GDPR, EU firms decreased data storage by 26% and data processing by 15% relative to comparable U.S. firms, becoming less “data-intensive.” To estimate the costs of the GDPR for firms, we propose and estimate a production function where data and computation serve as inputs to the production of “information.” We find that data and computation are strong complements in production and that firm responses are consistent with the GDPR representing a 20% increase in the cost of data on average. Variation in the firm-level effects of the GDPR and industry-level exposure to data, however, drives significant heterogeneity in our estimates of the impact of the GDPR on production costs.
    Keywords: Privacy; Production Function; Data; Cloud computing
    JEL: L51 L86 D22 L11
    Date: 2024–01–26
  4. By: Zdybel, Karol B.
    Abstract: Spontaneous norms, or simply norms, can be defined as rules of conduct that emerge without intentional design and in the absence of purposeful external coordination. While the law and economics scholarship has formally analyzed spontaneous norms, the analysis has typically been limited to scenarios where agents possess complete information about the interaction structure, including others' understanding of desirable and undesirable outcomes. In contrast, this paper examines spontaneous norms under the assumption of agent heterogeneity and private preferences. By employing a game-theoretical framework, the analysis reveals that norms' lifecycle can be divided into a formative phase and a long-run phase. The formative phase crucially shapes the norm's content and is itself critically dependent on the initial beliefs that agents hold about each other. Moreover, spontaneous norms are resilient to minor shocks to the belief structure but disintegrate when the magnitude of shocks becomes significant. In the final part, the paper highlights the broader implications of its findings, indicating applications in general law and economics, legal anthropology and history, and the sociology of social norms.
    Keywords: Spontaneous norms, Social norms, Custom, Private assessment, Legal history
    JEL: K00 K10 K39 P48 Z13
    Date: 2024
  5. By: Julien Jacob; Caroline Orset
    Abstract: Innovative firms have developed strategies to protect their business interests, such as concealing unfavourable results to avoid product withdrawal from the market (e.g. Monsanto, Servier). This behaviour poses a social challenge, as marketing hazardous products can have costly effects on Society (e.g. health and environment). This paper presents a model where a firm markets a product with unknown dangerousness. However, research investment may furnish valuable insights. A regulatory agency can grant or revoke marketing authorisation for the product based on its determination of the product’s safety. The firm is liable for civil and penal penalties if it causes harm. According to our study, deploying a combination of market authorisation and civil and penal liabilities can effectively disincentive the firm’s advocacy strategy. There is an emphasis on the need to impose penal liability if such lobbying conduct by the firm is uncovered. We examine the effects of these measures on firms’ motivations to invest in research to mitigate scientific uncertainty and the relationship between public and private research.
    Keywords: health and environmental risks, information acquisition, innovation, civil liability, penal liability, market authorisation, lobby.
    JEL: D01 D72 K32 Q57
    Date: 2024
  6. By: Brown, Dan (GiveWell); De Cao, Elisabetta (University of Bologna)
    Abstract: Child maltreatment is pervasive, often undetected, yet harmful. We investigate whether it is impacted by unemployment by leveraging unique administrative data including all reported cases of child abuse and neglect in the United States from 2004 to 2012. Using an industry shift-share instrument to identify county-level unemployment effects, we find a substantial rise in neglect. The likely channel is lower quality-time spent with children rather than decreased financial investments. Expenditures on children remain stable during recessions. Instead, higher local-area unemployment rate reduces parental childcare time, worsens mental health, and contributes to an increase in one-parent households.
    Keywords: child abuse and neglect, unemployment rate, recession, Bartik, mental health
    JEL: I10 D10 J12 J13 K42
    Date: 2024–02
  7. By: Cooper, Kerris; Obolenskaya, Polina
    Abstract: Published crime statistics show that following a long-term decline in violent crime there has been a flattening out in recent years and certain types of violent crime have increased. This research note examines who is most at risk of violence and how this has changed over time, focusing on the characteristics of sex, age, disability and ethnicity. Findings show that while violence significantly declined overall between 2004/05 and 2018/19, it did not decrease across all groups in the population.
    JEL: I00
    Date: 2022–09–15
  8. By: Garcez, Lucas N. (University of Tennessee); Padilla-Romo, María (University of Tennessee); Peluffo, Cecilia (University of Florida); Pineda-Torres, Mayra (Georgia Institute of Technology)
    Abstract: We study the causal relationship between educational attainment and teenage birth rates by focusing on a large-scale, country-wide reform that made high school compulsory and removed previously existing school capacity constraints in Mexico. Relying on administrative data on schools and births, we implement a difference-in-differences strategy that exploits variation across time and municipality-level exposure to the reform to explore the effects of expanding educational opportunities on teenage fertility. We find that teenage birth rates decreased by 2.8 percent after the education reform in municipalities with high increases in high school availability relative to municipalities with low increases. This decline is not driven by a decline in the time teenagers had to engage in risky behaviors (incapacitation effect) but a potential change in expectations for the future.
    Keywords: education reform, teenage birth rate, human capital
    JEL: I12 I21 I28 J13 J16
    Date: 2024–02

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