nep-law New Economics Papers
on Law and Economics
Issue of 2024‒11‒04
three papers chosen by
Yves Oytana, Université de Franche-Comté


  1. Digging for Trouble? Uncovering the Link Between Mining Booms and Crime By Rodríguez-Puello, Gabriel
  2. Commitment to the truth creates trust in market exchange: Experimental evidence By Nicolas Jacquemet; Stéphane Luchini; Jason Shogren; Adam Zylbersztejn
  3. Female Financial Portfolio Choices and Marital Property Regimes By Lidia Cruces; Isabel Micó-Millán; Susana Párraga

  1. By: Rodríguez-Puello, Gabriel
    Abstract: This paper evaluates the local effects of an exogenous economic shock, specifically, a mining boom, on crime levels and the mechanisms behind this relationship, including the effect of the boom on local economies’ labor market conditions. The paper contributes with empirical evidence to the literature on the impact of commodity booms, specifically mining, on criminal activities. Based on the exogeneity of the mining boom and the geographical location of minerals, I apply the synthetic control method using municipality-level data from Sweden for the period 1996-2015. This paper focuses on the total number of crimes, which is then subdivided into crimes against persons and crimes against wealth. I find evidence that the mining boom improves the labor market conditions of mining municipalities, which translates into long-term (2013, 2014, and 2015) reductions in total crime. The evidence suggests that the improvement in labor market conditions (employment, wages, and disposable income) is the main mechanism by which the mining boom reduces crime. I find no evidence for the other mechanisms considered: the mining boom does not affect the population composition, the government’s crime prevention capacity, or the income inequality in mining municipalities.
    Date: 2024–09–16
    URL: https://d.repec.org/n?u=RePEc:osf:osfxxx:s8ayp
  2. By: Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini; Jason Shogren; Adam Zylbersztejn
    Abstract: Under incomplete contracts, the mutual belief in reciprocity facilitates how traders create value through economic exchange. Creating such beliefs among strangers can be challenging even when they are allowed to communicate, because communication is cheap. In this paper, we first extend the literature showing that a truth-telling oath increases honesty to a sequential trust game with pre-play, fixed-form, and cheap-talk communication. Our results confirm that the oath creates more trust and cooperative behavior thanks to an improvement in communication; but we also show that the oath induces selection into communication -it makes people more wary of using communication, precisely because communication speaks louder under oath. We next designed additional treatments featuring mild and deterrent fines for deception to measure the monetary equivalent of the non-monetary incentives implemented by a truth-telling oath. We find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation. Altogether, these results confirm that allowing for interactions under oath within a trust game with communication creates significantly more economic value than the identical exchange institutions without the oath.
    Keywords: Trust game, cooperation, communication, commitment, deception, fine, oath
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-04722343
  3. By: Lidia Cruces (GOETHE UNIVERSITY FRANKFURT); Isabel Micó-Millán (BANCO DE ESPAÑA); Susana Párraga (EUROPEAN CENTRAL BANK)
    Abstract: This paper studies the relationship between married couples’ portfolio choices and property division rules. Using rich household survey data, we exploit the regional variation in marital laws across Spain to estimate the causal effects of property division rules on household financial investment. We find that separate-property couples hold riskier financial portfolios than community-property ones when wives take charge of the household finances. To understand this gap in risky asset holdings, we develop a financial portfolio choice model where couples are subject to divorce risk but differ in their property division regimes and the gender of the spouse making the financial decisions. A model in which the costs of dissolving a community property regime in the event of divorce are sufficiently high for women is likely to replicate the empirical estimates. High dissolution costs of marital assets upon divorce reduce spouses’ future disposable income in the event of divorce, encouraging precautionary savings in the form of safe assets during marriage as compared with their separate-property counterparts who bear no cost. Greater transfers of savings between couples in divorce attenuate this mechanism, while lower income levels reinforce it.
    Keywords: personal finance, portfolio choice, marriage, gender, family law
    JEL: D14 G11 J12 J16 K36
    Date: 2024–10
    URL: https://d.repec.org/n?u=RePEc:bde:wpaper:2434

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