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on Law and Economics |
| By: | Mayur Choudhary |
| Abstract: | This paper studies the effect of campaign finance on judicial selection and production efficiency. Using the Supreme Court’s surprise verdict in the Citizens United v. FEC case in 2010, which generates exogenous variation in campaign finance laws, I document that the removal of such bans led to a 33% ($ 200, 000) increase in the average electoral expenditure of judicial candidates and increased competition in State Supreme Court judge elections. The judicial bench also becomes populated with more business-friendly judges. State courts decide the majority of labor, contract, and administrative law disputes, and the State Supreme Court has the power to set legal precedents. Therefore, shifts in the judicial bench of the State Supreme Court affect the legal environment and the contracting choices of firms and labor. I document that labor productivity measured as value added per worker increased by 8% in treated states with judicial elections. For sectors more reliant on contract enforcement, labor productivity is higher in states with judicial elections. Overall, removing constraints on electoral finance improves competition in judicial elections, the judicial bench becomes more business-friendly, and improves production efficiency due to the alleviation of contract-enforcement frictions |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2024-07&r= |
| By: | Zerbe, Richard |
| Abstract: | Abstract This paper explores the relationship between law and applied welfare economics, BCA, and indicates how they are mutually enhancing. A definition of underlying principles for benefit cost analysis is given, from which rules for its application are derived. These rules are useful in considering arguments and outcomes in legal cases and for legal reasoning. I invoke norms, reference points, and legal right uncertainty, along with the role of sentiments and compensation for losses. In doing this the foundations of BCA are explicated and the interrelationship between law and applied welfare economics is made clearer. |
| Keywords: | rights; uncertainty; Posner; |
| JEL: | K0 K1 K10 |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121295&r= |
| By: | Cai, Xiqian; Chen, Shuai; Cheng, Zhengquan |
| Abstract: | Gender inequality and discrimination still persist, even though the gender gap in the labor market has been gradually decreasing. This study examines the effect of the #MeToo movement on judges' gender gap in their vital labor market outcome-judicial decisions on randomly assigned legal cases in China. We apply a difference-in-differences approach to unique verdict data including rich textual information on characteristics of cases and judges, and compare changes in sentences of judges of a different gender after the movement. We find that female judges made more severe decisions post-movement, which almost closed the gender gap. Moreover, we explore a potential mechanism of gender norms, documenting evidence for improved awareness of gender equality among women following the movement and stronger effects on judges' gender gap reduction in regions with better awareness of gender equality. This implies that female judges became willing to stand out and speak up, converging to their male counterparts after the #MeToo movement. |
| Keywords: | #MeToo movement, Gender gap, Inequality, Judicial decision, Crime, Machine Learning |
| JEL: | J16 K14 O12 P35 D63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1453&r= |
| By: | Dinarte, Lelys; Egaña del Sol, Pablo; Martínez, Claudia; Rojas Alvarado, Cindy Jacqueline |
| Abstract: | After-school programs (ASP) that keep youth protected while engaging them in socio-emotional learning might address school-based violent behaviors. This paper experimentally studies the socio-emotional-learning component of an ASP targeted to teenagers in public schools in the most violent neighborhoods of El Salvador, Honduras, and Guatemala. Participant schools were randomly assigned to different ASP variations, some of them including psychology-based interventions. Results indicate that including psychology-based activities as part of the ASP increases by 23 percentage points the probability that students are well-behaved at school. The effect is driven by the most at-risk students. Using data gathered from task-based games and AI-powered emotion-detection algorithms, this paper shows that improvement in emotion regulation is likely driving the effect. When comparing a psychology-based curriculum aiming to strengthen participants' character and another based on mindfulness principles, results show that the latter improves violent behaviors while reducing school dropout. |
| Keywords: | After-school programs;Psychology-based interventions;School-based violence;Emotion regulation |
| JEL: | I29 K42 I25 D87 |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13448&r= |
| By: | Fotis, Panagiotis; Polemis, Michael |
| Abstract: | Explicit collusion, or cartel behavior, involves coordinated efforts among firms within a market to restrict competition for their mutual benefit. Recidivism in this context occurs when cartel members, previously fined for such activities, establish a new cartel in the future. This paper examines 111 cartel cases from various markets and periods in the US to assess the impact of recidivism on productivity growth. We define a recidivist as a repeat offender with at least two fines. Investigating the causality between cartel recidivism and total factor productivity (TFP) growth is crucial for several reasons. First, understanding this relationship helps policymakers and regulators design more effective anti-cartel enforcement strategies. Second, examining the causality between cartel recidivism and TFP growth provides insights into the broader economic impacts of anti-competitive practices. Ultimately, such investigations help in creating a more efficient and equitable economy, where market forces drive productivity improvements and sustainable economic growth. Our econometric findings drawn from OLS and quantile regression analysis indicate a negative relationship between recidivism and productivity growth. The rationale is that recidivism undermines the effectiveness of anti-cartel enforcement, which consequently hampers productivity growth in the affected markets. |
| Keywords: | Cartels; Recidivism; Competition Policy; Anti-Cartel Enforcement; TFP |
| JEL: | D24 K21 L41 |
| Date: | 2024–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121386&r= |
| By: | Cohen D'Agostino, Mollie; Michael, Cooper E; Ramos, Marilla; Correa-Jullian, Camila |
| Abstract: | Vehicle automation represents a new safety frontier that may necessitate a repositioning of our safety oversight systems. This white paper serves as a primer on the technical and legal landscape of automated driving system (ADS) safety. It introduces the latest AI and machine learning techniques that enable ADS functionality. The paper also explores the definitions of safety from the perspectives of standards-setting organizations, federal and state regulations, and legal disciplines. The paper identifies key policy options building on topics raised in the White House’s Blueprint for an AI Bill of Rights, outlining a Blueprint for ADS safety. The analysis concludes that potential ADS safety reforms might include either reform of the Federal Motor Vehicle Safety Standards (FMVSS), or a more holistic risk analysis “safety case” approach. The analysis also looks at caselaw on liability in robotics, as well as judicial activity on consumer and commercial privacy, recognizing that the era of AI will reshape liability frameworks, and data collection must carefully consider how to build in accountability and protect the privacy of consumers and organizations. Lastly, this analysis highlights the need for policies addressing human-machine interaction issues, focusing on guidelines for safety drivers and remote operators. In conclusion, this paper reflects on the need for collaboration among engineers, policy experts, and legal scholars to develop a comprehensive Blueprint for ADS safety and highlights opportunities for future research. |
| Keywords: | Law, Automated vehicle control, traffic safety, case law, policy, machine learning, artificial intelligence |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt46d6d86x&r= |
| By: | Muhammad Zia Hydari; Yangfan Liang; Rahul Telang |
| Abstract: | Data breach disclosure (DBD) is presumed to improve firms' cybersecurity practices by inducing fear of subsequent revenue loss. This revenue loss, the theory goes, will occur if customers punish an offending firm by refusing to buy from them and is assumed to be the primary mechanism through which DBD laws will change firm behavior ex ante. However, our analysis of a large-scale data breach at a US retailer reveals no evidence of a decline in revenue. Using a difference-in-difference design on revenue data from 302 stores over a 20-week period around the breach disclosure, we found no evidence of a decline either across all stores or when sub-sampling by prior revenue size (to account for any heterogeneity in prior revenue size). Therefore, we posit that the presumed primary mechanism of DBD laws, and thus these laws may be ineffective and merely a lot of "sound and fury, signifying nothing." |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.15215&r= |
| By: | Gaétan de Rassenfosse (Ecole polytechnique federale de Lausanne); Adam Jaffe (Brandeis University); Joal Waldfogel (University of Minnesota) |
| Abstract: | The arrival of creative machines—software capable of producing human-like creative content—has triggered a series of legal challenges about intellectual property. The outcome of these legal challenges will shape the future of the creative industry in ways that could enhance or jeopardize welfare. Policymakers are already tasked with creating regulations for a post-generative AI creative industry. Economics may offer valuable insights, and this paper is our attempt to contribute to the discussion. We identify the main economic issues and propose a framework and some tools for thinking about them. |
| Keywords: | generative AI; machine learning; copyright; fair use |
| JEL: | O34 K20 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iip:wpaper:27&r= |
| By: | Dhaval M. Dave; Bilge Erten; David W. Hummel; Pinar Keskin; Shuo Zhang |
| Abstract: | The opioid crisis generates broader societal harms beyond direct health and economic effects, impacting non-users through adverse spillovers on children, families, and communities. We study the spillover effects of a supply-side policy aimed at reducing the over-prescribing of opioids on women’s wellbeing by examining its effects on intimate partner violence (IPV). Using administrative data on incidents reported to law enforcement, in conjunction with quasi-experimental variation in the adoption of stringent mandatory access prescription drug monitoring programs, we find that these policies have generated a downstream benefit for women by significantly reducing their overall exposure to IPV and IPV-involved injuries by 9 to 10 percent. Strongest effects are experienced by groups with higher rates of opioid consumption at baseline, including non-Hispanic Whites. However, we also find a significant uptick in heroin-involved IPV incidents, suggesting substitution into illicit drug consumption. Our results highlight the need to identify high-risk groups prone to switching to illicit opioids and to address this risk through evidence-based policies. Accounting for effects on IPV adds to the estimated societal burden of the opioid epidemic. |
| JEL: | H0 I12 I18 J12 J16 K0 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32563&r= |
| By: | Gary D. Libecap |
| Abstract: | The governance and transaction cost insights of Oliver Williamson (1975, 1985, 1996, 2010) and Ronald Coase (1937, 1992) have framed antitrust polices and firm management strategies. Transaction cost economics explain efficient governance adaptation. With a focus on private efficiency gains within firms and markets, however, neither Williamson nor Coase explore political exchange and rent-seeking. Coase (1960) sought to reform Pigouvian externality regulation based on transaction cost efficiencies. He called for assignment of property rights and bargaining, and for institutional comparisons of costs and benefits to reveal relative transaction cost and welfare advantages. His 1960 paper is among the most cited in economics, but his remedies have not been adopted as the primary approach in major US environmental policies. All US environmental and natural resource laws since 1970 are Pigouvian. Limited Coasean bargaining occurs late and around the edges of the laws. The efficiency advantages, welfare gains, and collaborative responses Coase suggested have not been achieved. The Magnuson-Stevens Fishery Act of 1976, enacted 16 years after Coase, used Pigouvian fishery regulation for 25 years, and upon failure, was replaced by abbreviated property rights and trade. Fishery economic values were lowered relative to what might have been possible. The Endangered Species Act of 1973 rejected previous Coasean legislation authorizing purchase of critical habitat and instead opted for uncompensated Pigouvian controls on private landowners, who held most endangered species. Landowners resisted, and only 3% of listed endangered species have recovered. There is no evidence of a weighing of comparative transaction costs between Coase or Pigou in enacting any legislation. Rent-seeking via political bargaining among interest groups, politicians, and agency officials explains many of the observed patterns in externality regulation. The analysis suggests that transaction cost economics play a lesser role in the political arena. |
| JEL: | K11 K32 N42 N5 N52 N92 Q52 Q53 Q57 Q58 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32603&r= |
| By: | Ajzenman, Nicolás; Ardanaz, Martín; Cruces, Guillermo; Feierherd, Germán; Lunghi, Ignacio |
| Abstract: | Recent literature highlights a paradox in corruption prevention messaging: instead of reducing tolerance for corruption, such campaigns can inadvertently intensify it by priming the existence of corruption while failing to diminish citizens beliefs about government misbehavior. Building on Cheeseman and Peiffer (2022), which demonstrates that messages focused on combating corruption often backfire among individuals with preexisting negative perceptions of corruption, we posit that an effective strategy to mitigate backfiring involves shifting those pessimistic perceptions before delivering the corruption eradication messages. To test our hypothesis, we conducted a randomized survey experiment within the context of a major institutional reform to reduce tax agency corruption in Honduras. Results confirm the backfiring findings of previous literature, but also show that our approach effectively mitigates perceived corruption and diminishes the propensity for tax evasion, especially among skeptics. |
| Keywords: | corruption;tax administration;Tax evasion;Survey experiment |
| JEL: | C90 D90 H26 K42 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13555&r= |
| By: | Samnick, Denis Augustin; Liwerant, Sara; De Herdt, Tom; Malukisa Nkuku, Albert |
| Abstract: | Makala Central Prison is severely overcrowded with 14, 500 inmates, far exceeding its capacity of 1, 500. Less than 20% of the inmates are sentenced due to delays in court proceedings and irregular detentions caused by missing or mishandled court documents. These irregularities lead to prolonged incarceration beyond the sentenced period. Despite efforts by Congolese authorities, NGOs, and international partners like UNDP and EU to address these issues with initiatives such as digitizing judicial files and implementing alert systems for irregular detentions, the problem persists. Makala Central Prison remains a focal point for the ongoing challenge of irregular imprisonments in the Congo. |
| Keywords: | Kinshasa, prisons |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:iob:apbrfs:2024004&r= |
| By: | Ludovica Ciasullo; Martina Uccioli |
| Abstract: | We document how a change to work arrangements reduces the child penalty in labor supply for women, and that the consequent more equal distribution of household income does not translate into a more equal division of home production between mothers and fathers. The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish three main results. First, the Fair Work Act was used by new mothers to reduce their weekly working hours without renouncing their permanent contract, hence maintaining a regular schedule. Second, with this work arrangement, working mothers’ child penalty declined from a 47 percent drop in hours worked to a 38 percent drop. Third, while this implies a significant shift towards equality in the female- and male-shares of household income, we do not observe any changes in the female (disproportionate) share of home production. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2024-03&r= |