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on Law and Economics |
| By: | Aida Caldera Sánchez (OECD); Alberto González Pandiella (OECD) |
| Abstract: | Crime imposes significant economic and fiscal costs through its effects on productivity, investment, public finances, and institutional trust. While the macroeconomic consequences of violent crime are increasingly documented, less attention has been paid to the effectiveness of policies aimed at reducing crime and improving public safety. This paper provides a policy-oriented review of evidence-based crime reduction strategies across OECD and Latin American countries. It first discusses the main channels through which crime affects economic outcomes and reviews recent trends in homicides, drug trafficking, money laundering, and cybercrime. The paper then develops a policy framework structured around three complementary pillars: control, prevention, and rehabilitation and reintegration. Drawing on OECD country desk inputs and a review of impact evaluations, it assesses which interventions have proven most effective in reducing crime and recidivism. The analysis highlights the importance of integrated approaches combining targeted law enforcement with social prevention and rehabilitation measures. It also underscores the growing relevance of cybercrime and digital resilience for macroeconomic performance and public policy. The paper concludes that systematic evaluation and stronger integration of crime-related risks into macroeconomic analysis can help improve the effectiveness and efficiency of public spending on security and crime reduction. |
| Keywords: | Crime, crime prevention, cybercrime, homicide, institutions, Latin America, organised crime, policing, productivity, public expenditure, public security, rehabilitation |
| JEL: | D74 H56 K14 K42 O17 O54 |
| Date: | 2026–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1866-en |
| By: | Meléndez, Marcela; Tenjo, Nicolás Peña; Schargrodsky, Ernesto; Vargas, Juan F. |
| Abstract: | This policy paper examines the scale and nature of organized crime in Latin America and the Caribbean (LAC), highlighting its uniquely violent character. We propose a novel metric—excess lethal violence—that underscores how the region stands out globally in terms of criminal violence. Organized crime in LAC significantly undermines growth, productivity, and social mobility, reinforcing poverty and inequality traps. We argue that while eradicating organized crime is unlikely—just as developed countries coexist with entrenched mafia structures—countries already dealing with entrenched organized crime, as well as those where criminal networks have yet to fully embed themselves, still have a window of opportunity to contain their most harmful effects. The paper outlines four critical policy priorities for the region: (a) prison reform to address their criminogenic nature; (b) improved training and coordination within and across police and law enforcement agencies; (c) reinforced judicial effectiveness, reducing impunity and defining strategic priorities; and (d) international coordination and collaboration. We emphasize the value of emerging research efforts that combine fine-grained data with deep contextual knowledge of LAC’s local dynamics to inform more effective and actionable policy solutions. |
| Date: | 2026–05–25 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:q4wpj_v1 |
| By: | spring, water |
| Abstract: | This article advances a foundational jurisprudential proposition bearing upon the survival of human civilization: substantive justice is the source and telos of procedural justice; procedural justice is the instrument and means of substantive justice. Through a comparative legal history of civilizational collapse—from the Qin Code and Roman law to the French Ancien Régime and contemporary American institutional crises—the article demonstrates that the demise of states is not accidental but the cumulative consequence of procedural justice rigidifying and severing itself from the evolving demands of substantive justice. The article introduces a “quadruple pathology” framework (cumulative effect, legitimacy depletion, feedback failure, spillover and cascade) to mechanistically analyze this divergence, and proposes an actionable institutional design—comprising the Independent Fact-Finding and Investigation Committee (IFIC), the Independent Audit and Supervision Bureau (IASB), and the Global Correction and Recovery Fund (GCRF)—to establish perpetual self-calibration mechanisms within legal systems. The thesis is universal: any intelligent civilization that fails to equip its procedural systems with the capacity to perceive and correct their divergence from substantive justice will accumulate contradictions until systemic collapse. |
| Keywords: | Procedural Justice; Substantive Justice; Legal Evolution; Isomorphic Co-Evolution; Civilizational Collapse; Radbruch Formula; Institutional Calibration; Sunset Clause; Law & Economics; Comparative Legal History; Feedback Failure; Legitimacy Depletion |
| JEL: | K1 K10 K40 K42 |
| Date: | 2026–05–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129201 |
| By: | Max Kapustin; Aaron Chalfin; Jeremy Biddle; Brian A. Wade; Natasha Khade; Cristina Layana; Ben Struhl; Anthony A. Braga |
| Abstract: | Baltimore's homicide rate fell by roughly 60% between 2022 and 2025, an exceptional decline among large U.S. cities. At the start of this period, Baltimore launched a strategy that concentrated police and social service resources on a small set of people thought to be driving group-involved gun violence. The approach—“focused deterrence”—has been implemented in some form by cities across the U.S. The strategy was introduced first in the Western police district, one of the highest-violence communities in the U.S. Relative to comparable Baltimore neighborhoods, we estimate that within 18 months shootings and homicides in the Western district fell by roughly one third and carjackings by about 40%, with no spillovers elsewhere in the city. These gains came without expanding overall enforcement: total arrests were flat even as arrests for serious violent crimes rose sharply, indicating that the strategy redirected police authority toward serious violence rather than widening the net of the justice system. Person-level and qualitative evidence point to deterrence, incapacitation, services, and community messengers' legitimacy as contributing channels, with no single mechanism explaining the bulk of the decline. The social value of the averted violence is roughly 35 times the program's first-year spending. Citywide, Baltimore's homicide rate over this period was about 25% below a synthetic counterfactual built from other large cities. The timing of Baltimore's homicide decline and the absence of a larger-than-expected drop in other violent crimes are consistent with the expansion of focused deterrence across the city and a broader shift toward a targeted, partnership-based response to group violence. Baltimore's experience offers an important blueprint for how cities can achieve reductions in gun violence at scale. |
| JEL: | K4 K40 K42 K49 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35292 |
| By: | Sonia Bhalotra; N. Meltem Daysal; Mathias Fjellgaard Jensen; Thomas H. Jørgensen; Sébastien Montpetit |
| Abstract: | Using four decades of Danish administrative data, we estimate the intergenerational transmission of violent crime victimization. Sons are twice as likely, and daughters three times as likely, to be victimized if a parent was victimized, with stronger associations if the mother was the victim. Controlling for cohort, municipality, socioeconomic factors, parental cohabitation, and parental offending explains about 60% of this correlation. The link is weaker in higher-income families; it persists for sons, but is driven to zero for daughters. Further, children of victimized parents experience lower absolute income mobility, comparable to the Black-White difference for men in the United States. |
| Keywords: | victimization, violent crime, intergenerational transmission, income mobility |
| JEL: | K42 J12 J62 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12693 |
| By: | Yue Huang (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University); Michael Kvasnicka (Otto von Guericke University Magdeburg, RWI, IZA@LISER) |
| Abstract: | During the 2015 refugee crisis, nearly one million refugees arrived in Germany, raising widespread concern that crimes against natives would rise. Using novel county-level data, we study this question empirically in first-difference and 2SLS regressions. Our results do not support the view that Germans were victimized in greater numbers by refugees, as measured by their rate of victimization in crimes with refugee suspects. Our findings are of great policy and public interest, and also of material relevance for the broader literature on immigration and crime, which mostly considers crimes per capita or variants thereof. We show that such aggregate measures may be insufficiently informative about the actual victimization patterns of specific groups. |
| Keywords: | Immigration, Refugees, Crimes, Crimes Against Natives |
| JEL: | F22 J15 K42 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iaa:dpaper:202603 |
| By: | Santos, Mike; Lutzker, Liza; Griswold, Julia PhD |
| Abstract: | This report investigates jaywalking laws in connection with traffic safety, racial equity, and street design, focusing on California. It traces the concept of "jaywalking" to an early 20th-century auto industry campaign to shift safety responsibility from drivers to pedestrians. By analyzing national and California pedestrian injury and fatality data (2009–2022) alongside California Racial and Identity Profiling Act (RIPA) police stop data (2018–2022), the study describes demographic disparities in both pedestrian crashes and law enforcement of jaywalking. It also documents recent legislative efforts in California and other states and cities to decriminalize or reform jaywalking enforcement. Findings show that pedestrian fatalities reached a 40 year high in 2022, with California’s rates consistently exceeding the national average. Significant racial and economic disparities exist: Black pedestrians experience fatality rates multiple times those of White pedestrians, and lower-income neighborhoods suffer disproportionately. RIPA data further reveal that jaywalking-related police stops disproportionately affect Black pedestrians. These disparities are likely driven by the built environment—such as wide arterials and sparse crosswalks—which incentivizes mid-block crossings, particularly in under-invested communities. The report also examines California’s Assembly Bill (AB) 2147 (2022), which partially decriminalized jaywalking by limiting enforcement to cases of "immediate hazard." It concludes by recommending continued monitoring of enforcement and safety data to track AB 2147’s impact, alongside collecting built environment data to better contextualize racial and economic disparities in pedestrian outcomes. |
| Keywords: | Social and Behavioral Sciences, Pedestrians, Pedestrian safety, Transportation equity, Injuries, Data analysis, Traffic law enforcement, Policy analysis |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsrrp:qt4x06k8ww |
| By: | Bixing Qiao; Weixuan Xia |
| Abstract: | The present paper investigates how insiders strategically navigate ongoing legal risk while leveraging stealth trading within a continuous-time Kyle-type framework. Legal enforcement operates concurrently with trading, which dynamic can be adversely obscured by a large surrounding population of noise traders. While surveillance intensity responds directly to the insider's trading intensity, triggering a random prosecution time, the resulting legal sanctions encompass both strategy-focused criminal penalties and profit-dependent civil penalties. Employing a new impact-neutral measure change, equilibrium analysis shows that even after achieving stealth, the insider internalizes regulatory exposure, and enforcement can significantly shape equilibrium trading strategies. The associated limiting equilibria yield a rich set of outcomes, with three key insights for regulatory impact: (i) under committed regulatory scrutiny, the insider trades a time-varying function of the discrepancy between the asset's fundamental value and its market price, and trading may intensify indefinitely near the end of the trading horizon as legal risk recedes; (ii) merely raising penalties as an advantageous selection cost proves ineffective in offsetting declines in regulatory diligence; (iii) criminal penalties remain essential for deterring aggressive insider trading, as they impose critical temporal constraints on trading intensity not achievable through civil penalties alone. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.27684 |
| By: | water, spring |
| Abstract: | This paper establishes the theoretical framework of the School of Legal-Economic Isomorphism, arguing that law and economy exist not in a relationship of mutual influence, but in an isomorphic relationship of definition and being defined. Drawing on comparative historical analysis spanning from the Code of Hammurabi and Fuxi’s trigrams to the Roosevelt New Deal, the study distills three sub-laws of civilizational evolution: the Law of Productivity Step-Functions, the Law of Legal Reconstruction, and the Law of Alignment Synchronization. It diagnoses the persistent global economic stagnation of the past two decades as a “Temporal Misalignment” between industrial-age legal frameworks and digital-age productive forces. The paper introduces core analytical concepts—Digital Public Infrastructure, Digital Easement, Digital Rent, and Rentier Capitalism—to demonstrate that large digital platforms function not as private stores but as digital land extracting feudal-like rents. The study proposes a constitutional-level institutional engineering program for the digital age, including the publicization of platforms, the prohibition of digital rent, and the establishment of data public ownership, while critically transcending existing schools of Law and Economics, Institutional Economics, and Marxist Political Economy. |
| Keywords: | Legal-Economic Isomorphism; Constitutional Reconstruction; Digital Public Infrastructure; Digital Rent; Platform Economy; Temporal Misalignment; Rentier Capitalism; Institutional Engineering; Law and Economics |
| JEL: | K0 K1 K2 |
| Date: | 2026–05–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129198 |
| By: | Pascal Nieder; Sven Arne Simon |
| Abstract: | Compliance with complex regulatory requirements can be challenging. We study why and how complexity affects non-compliance in terms of incorrect reporting. Our novel experimental design isolates two distinct complexity effects: an increase in honest mistakes and a substantial shift toward self-serving dishonesty. We identify two mechanisms for this dishonesty shift. First, individuals with social image concerns systematically take advantage of plausible deniability. Second, we document an unexplored form of dishonesty: besides conscious lies, individuals use fraudulent shortcuts in response to complex cheating opportunities. |
| Keywords: | dishonest behavior, complexity, lying, non-compliance, experiment |
| JEL: | C91 D91 H26 K42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12692 |
| By: | Walker Crawford, Noah; Reyes, Joy; Petkov, Nicholas; Beaulieu, Julien |
| Abstract: | This guide examines corporate defences used in climate litigation. Drawing on 10 case studies from eight jurisdictions, it analyses how corporate defendants have deployed these defence strategies, highlighting recurring themes and emerging trends. It also discusses how courts have engaged with these defence strategies. The analysis provides legal practitioners, scholars and scientists with a systematic view of the legal arguments that are currently being used by corporate defendants. |
| JEL: | R14 J01 |
| Date: | 2026–04–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138043 |
| By: | Maike Roth; Friedrich Schneider |
| Abstract: | Using a conducted survey for Germany allows us to evaluate the access to illicit tobacco products and the propensity to engage in illicit purchasing behavior. By separating realized opportunities from stated openness toward future illicit purchases, the analysis provides new insights into the behavioral foundations of illicit tobacco markets. Understanding these mechanisms is particularly relevant in the current policy context. If illicit demand responds not only to prices but also to attitudes toward taxation and regulation, further tax increases may have heterogeneous effects across population groups. Overall, the findings suggest that effective tobacco tax policy should not be based solely on price incentives. Where regulation is perceived as a restriction of freedom, the risk of openness in the illicit market may increase. |
| Keywords: | tobacco tax noncompliance, conducted survey, illicit tobacco products and markets, price incentives, regulation |
| JEL: | K42 M38 H26 O17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12690 |
| By: | Tsz Chai Fung; Lie Ma; Liang Peng; Fang Yang |
| Abstract: | Social inflation, which is the rise in liability claim costs beyond general economic inflation, has become a major concern for insurers and reinsurers, yet it is difficult to quantify because litigation outcomes are heavy-tailed and the mix of cases reaching verdict versus settlement changes over time. Using a large database of US jury verdicts and settlements, we develop case-mix-adjusted social inflation measures through multiple channels that matter to reinsurers: plaintiff win rates (a frequency-type channel), settlement propensity (a frequency-type channel), and verdict/settlement severity. The approach combines rolling-window logistic regression for probabilities and quantile (value-at-risk) regression for severities, with uncertainty quantified via a random-weighted bootstrap. We find statistically significant relative increases in plaintiff win probability of approximately 20%-30% from 2009 to 2024, alongside a statistically significant relative decline in settlement probability of more than 10% over the same period. The dominant channel is verdict severity: Even after controlling for explanatory variables, verdict awards show a sharp rise after 2020, increasing by more than 100% from 2020 to 2024, whereas settlement amounts show limited and often statistically insignificant inflation. Therefore, inflation in total amounts payable to plaintiffs closely tracks verdict severity. Social inflation is more pronounced in corporate-defendant and uninsured-defendant cases and in states without tort caps or third-party litigation funding regulation. In addition, we find that social inflation has impacts not only on "nuclear verdicts" but also, in a similar manner, on moderate losses. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.27265 |
| By: | Saiman, Chaim |
| Abstract: | Courts never tire of saying an insurance policy is “just a contract” and subject to ordinary rules of contract law. Contract here signals a plain language approach that strives for formal neutrality between the parties. Yet courts also frequently rely on a narrative that an insurance policy strives to be a “just contract” with special pro-policyholder rules that reach beyond the plain language. How is insurance simultaneously “just a contract” and a “just contract?” Prior scholarship has noted the confusion, but this Article aims to reconcile the dueling narratives. When the issue relates to scope or breadth of coverage—whether a loss is included within the bounds of the policy—strict construction gains the upper hand. But when the focus is on the suite of rights that flow from coverage—such as expanded remedies available upon an insurer breach—courts craft coverage rights which are deeper than what can be derived from the plain meaning of the policy. This distinction makes sense considering the degree of uncertainty posed in each setting. Broadening a policy to risks beyond its coverage base threatens to upend the match between risks and premiums. By contrast, the cost of deeper insurance is derivative of risks already assumed by the policy and thus more predictable to the insurer. This analysis gives courts a framework to understand when they should treat insurance law differently from contract law. Furthermore, because plain language exerts a strong pull over the entire landscape of contract law, clearly presenting counterexamples and their rationale should prevent courts from importing plain language concepts into areas of insurance law that are anchored on competing normative foundations. |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:lawarc:evf52_v1 |
| By: | Khan, Wahaj Ahmed; Siddiqui, Danish Ahmed |
| Abstract: | This paper examines the regulatory and punitive implications of indulgence in money laundering violations and their impact upon global financial connections via de-risking and delinking of financial institutions. Through thematic analysis of some of the most significant enforcement cases, including HSBC, Westpac, Danske Bank, Deutsche Bank, and Westpac, alongside the theory of deterrence and institutionalization, the research examines how financial institutions react to the anti-money laundering (AML) pressure. The study finds that the increasing severity of penalties for compliance, regulatory uncertainty and the risk of a reputational hazard have caused banks to cut off the relationship with their correspondent banks, particularly in regions with high risk and emerging markets. Although these actions are in line with the goals of deterrence to improve compliance. However, they can also lead to financial exclusion through the disruption of remittance flow, trade finance and access to aid for countries such as Nigeria, El Salvador, and Mozambique. The paper suggests that while AML frameworks are vital, a heavy reliance on punitive measures, without reforms that build capacity, could backfire and harm the economies that require the greatest financial integration. It advocates for a balanced regulator who is risk-sensitive, backed with international cooperation and transparency and a spirit of innovation. |
| Keywords: | Anti-Money Laundering, Correspondent Banking, De-linking, Financial Inclusion, Regulatory Penalties, Thematic Analysis |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341080 |