The risk of divorce and household saving behavior

We analyze the impact of an increase in the risk of divorce on the savingbehaviour of married couples. From a theoretical perspective, the expected sign of theeffect is ambiguous. We take advantage of the legalization of divorce in Ireland in 1996as an exogenous increase in the likelihood of marital dissolution. We analyze the savingbehaviour over time of couples who were married before the law was passed. We proposea difference-in-differences approach where we use as comparison groups either marriedcouples in other European countries (not affected by the law change), or Irish familieswho did not experience a significant increase in the expected risk of divorce (such as veryreligious families, or single individuals). Our results suggest that the increase in the riskof divorce brought about by the law was followed by an increase in the propensity to saveof married couples, consistent with a rise in precautionary savings interpretation. Anincrease in the risk of marital dissolution of about 40 percent led to a 7 to 13 percent risein the proportion of married couples reporting positive savings.

Did the cooperative start life as a Joint-Stock company? business law and cooperatives in Spain, 1869–1931

Studies of Spanish cooperatives date their spread from the Law on Agrarian Syndicates of 1906. But the first legislative appearance of cooperatives is an 1869 measure that permitted general incorporation for lending companies. The 1931 general law on cooperatives, which was the first act permitting the formation of cooperatives in any activity, reflects the gradual disappearance of the cooperative’s "business" characteristics. In this paper we trace the Spanish cooperative’s legal roots in business law and its connections to broader questions of the freedom of association, the formation of joint-stock enterprises, and the liability of investors in business and cooperative entities. Our account underscores the similarities of the organizational problems approach by cooperatives and business firms, while at the same time respecting the distinctive purposes cooperatives served.

An approximate solution method for boundary layer flow of a power law fluid over a flat plate

The work in this paper deals with the development of momentum and thermal boundary layers when a power law fluid flows over a flat plate. At the plate we impose either constant temperature, constant flux or a Newton cooling condition. The problem is analysed using similarity solutions, integral momentum and energy equations and an approximation technique which is a form of the Heat Balance Integral Method. The fluid properties are assumed to be independent of temperature, hence the momentum equation uncouples from the thermal problem. We first derive the similarity equations for the velocity and present exact solutions for the case where the power law index n = 2. The similarity solutions are used to validate the new approximation method. This new technique is then applied to the thermal boundary layer, where a similarity solution can only be obtained for the case n = 1.

Law and the practise of principle in diverse societies

Projecte de recerca elaborat a partir d’una estada a la London School of Economics and Political Science, United Kingdom, entre 2007 i 2009. L’objecte principal del projecte ha estat analitzar les implicacions jurídico-polítiques i institucionals d’una teoria de la justícia i la igualtat liberals aplicada a societats multiculturals amb un marcat predomini de la diversitat cultural. L’anàlisi desenvolupa una línia d'investigació interdisciplinar - entre el dret i la teoria política - iniciada en una tesis doctoral sobre multiculturalisme i drets de les minories culturals (UPF, 2000) que va culminar en la publicació de Group Rights as Human Rights (Springer, 2006). La recerca adopta com a punt de partida les conclusions de l'esmentada obra, en especial, la rellevància del reconeixement de drets col•lectius; tanmateix, el tipus de qüestions plantejades, l’enfoc i la metodologia emprades són substancialment diferents. En concret, s'adrecen preguntes específiques sobre el model i aspiracions del constitucionalisme democràtic i el paper del dret en contextos multiculturals. També s’atorga un pes central a la dimensió institucional dels models de gestió de la diversitat que s’analitzen, prioritzant un enfocament comparatiu a partir de l’estudi de controvèrsies concretes. L’objectiu és superar algunes limitacions importants de la literatura actual, com ara la tendència a examinar en abstracte la compatibilitat de determinades demandes amb el constitucionalisme democràtic, sense abordar el funcionament d'estratègies de gestió de la diversitat cultural emprades en contextos concrets. Els treballs producte d'aquest projecte articulen les línies bàsiques d’un model pluralista, basat en principis més que en regles, que desafia els plantejaments dominants actualment. Aquest model es caracteritza pel compromís amb la legitimitat i igualtat comparatives, rebutjant el paternalisme i les visions liberals típiques sobre el paper de la regulació. La presumpció de l’“standing” moral dels grups identitaris és fonamental per tal de considerar-los interlocutors vàlids amb interessos genuïns. També s’argumenta que la integració social en contextos multiculturals no depèn tant de l’eliminació del conflicte sinó, sobre tot, d’una gestió eficient que eviti abusos de poder sistemàtics. El model defensa el rol del dret en la institucionalització del diàleg intercultural, però admet que el diàleg no necessàriament condueix a l’acord o a una estructura reguladora coherent i uniforme. Les aspiracions del ordre jurídic pluralista són més modestes: afavorir la negociació i resolució en cada conflicte, malgrat la persistència de la fragmentació i la provisionalitat dels acords. La manca d'un marc regulador comú esdevé una virtut en la mesura que permet la interacció de diferents subordres; una interacció governada per una multiplicitat de regles no necessàriament harmòniques. Els avantatges i problemes d’aquest model s'analitzen a partir de l'anàlisi de l’estructura fragmentària de l'ordre jurídic internacional i del règim Europeu de drets humans.

The short arm of the law: judicial institutions and local governance in Brazil

This paper estimates the effect of judicial institutions on governance at the local level in Brazil. Our estimation strategy exploits a unique institutional feature of state judiciary branches which assigns prosecutors and judges to the most populous among contiguous counties forming a judiciary district. As a result of this assignment mechanism there are counties with nearly identical populations, some with and some without local judicial presence, which we exploit to impute counterfactual outcomes. Conditional on observable county characteristics, offenses per civil servant are about 35% lower in counties that have a local seat of the state judiciary. The lower incidence of infractions stems mostly from fewer violations of financial management regulations by local administrators, fewer instances of problems in project execution and project managment, fewer cases of non-existent or ineffective civil society oversight and fewer cases of improper handling of remittances to local residents.

The Law of Impersonal Transactions: Meaning and Difficulties

Most economic interactions happen in a context of sequential exchange in which innocent third parties suffer information asymmetry with respect to previous "originative" contracts. The law reduces transaction costs by protecting these third parties but preserves some element of consent by property right holders to avoid damaging property enforcement-e.g., it is they as principals who authorize agents in originative contracts. Judicial verifiability of these originative contracts is obtained either as an automatic byproduct of transactions or, when these would have remained private, by requiring them to be made public. Protecting third parties produces a sort of legal commodity which is easy to trade impersonally, improving the allocation and specialization of resources. Historical delay in generalizing this legal commoditization paradigm is attributed to path dependency-the law first developed for personal trade-and an unbalance in vested interests, as luddite legal professionals face weak public bureaucracies.

Common law and civil law as pro-market adaptations

We argue that in the development of the Western legal system, cognitive departures are themain determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.

Banks and development: Jewish communities in the Italian Renaissance and current economic performance

Are differences in local banking development long-lasting? Do they affect long-term economic performance?I answer these questions by relying on an historical development that occurred in Italian cities during the 15thcentury. A sudden change in the Catholic doctrine had driven the Jews toward money lending. Cities thatwere hosting Jewish communities developed complex banking institutions for two reasons: first, the Jews werethe only people in Italy who were allowed to lend for a profit and, second, the Franciscan reaction to Jewishusury led to the creation of charity lending institutions, the Monti di Pietà, that have survived until today andhave become the basis of the Italian banking system. Using Jewish demography in 1500 as an instrument, Iprovide evidence of (1) an extraordinary persistence in the level of banking development across Italian cities (2)large effects of current local banking development on per-capita income. Additional firm-level analyses suggestthat well-functioning local banks exert large effects on aggregate productivity by reallocating resources towardmore efficient firms. I exploit the expulsion of the Jews from the Spanish territories in Italy in 1541 to arguethat my results are not driven by omitted institutional, cultural and geographical characteristics. In particular,I show that, in Central Italy, the difference in current income between cities that hosted Jewish communitiesand cities that did not exists only in those regions that were not Spanish territories in the 16th century.

Cashing by the hour: Why large law firms prefer hourly fees over contingent fees

Large law firms seem to prefer hourly fees over contingent fees. Thispaper provides a moral hazard explanation for this pattern of behavior.Contingent legal fees align the interests of the attorney with those ofthe client, but not necessarily with those of the partnership. We showthat the choice of hourly fees is a solution to an agency problem withmultiple principals, where the interests of one principal (law firm)collide with the interests of the other principal (client).

It's parties that choose electoral systems (or Duverger's Law upside down)

This article presents, discusses and tests the hypothesis that it is the number of parties what can explain the choice of electoral systems, rather than the other way round. Already existing political parties tend to choose electoral systems that, rather than generate new party systems by themselves, will crystallize, consolidate or reinforce previously existing party configurations. A general model develops the argument and presents the concept of 'behavioral-institutional equilibrium' to account for the relation between electoral systems and party systems. The most comprehensive dataset and test of these notions to date, encompassing 219 elections in 87 countries since the 19th century, are presented. The analysis gives strong support to the hypotheses that political party configurations dominated by a few parties tend to establish majority rule electoral systems, while multiparty systems already existed before the introduction of proportional representation. It also offers the new theoretical proposition that strategic party choice of electoral systems leads to a general trend toward proportional representation over time.

The long term effects of legalizing divorce on children

We estimate the effect of divorce legalization on the long-term well-being ofchildren. Our identification strategy relies on exploiting the different timing of divorcelegalization across European countries. Using European Community Household Paneldata, we compare the adult outcomes of cohorts who were raised in an environmentwhere divorce was banned with cohorts raised after divorce was legalized in the samecountry. We also have control countries where all cohorts were exposed (or notexposed) to divorce as children, thus leading to a difference-in-differences approach. Wefind that women who grew up under legal divorce have lower earnings and income aswell as worse health as adults compared with women who grew up under illegal divorce.These effects are not found for men. We find no effects of divorce legalization onchildren s family formation or dissolution patterns.

The effect of divorce laws on divorce rates in Europe

This paper analyzes a panel of 18 European countries spanning from 1950 to 2003 toexamine the extent to which the legal reforms leading to easier divorce that took placeduring the second half of the 20th century have contributed to the increase in divorce rates across Europe. We use a quasi-experimental set-up and exploit the different timing of the reforms in divorce laws across countries. We account for unobserved country-specificfactors by introducing country fixed effects, and we include country-specific trends tocontrol for time-varying factors at the country level that may be correlated with divorcerates and divorce laws, such as changing social norms or slow moving demographictrends. We find that the reforms were followed by significant increases in divorce rates.Overall, we estimate that the introduction of no-fault, unilateral divorce increased thedivorce rate by about 1, a sizeable effect given the average rate of 4.2 divorces per 1,000married people in 2002.

Corporate criminal law and organization incentives: A managerial perspective

Corporate criminal liability puts a serious challenge to the economictheory of enforcement. Are corporate crimes different from other crimes?Are these crimes best deterred by punishing individuals, punishing corporations, or both? What is optimal structure of sanctions? Shouldcorporate liability be criminal or civil? This paper has two majorcontributions to the literature. First, it provides a common analyticalframework to most results presented and largely discussed in the field.In second place, by making use of the framework, we provide new insightsinto how corporations should be punished for the offenses committed bytheir employees.

The economics of organized crime and optimal law enforcement

This paper extends the optimal law enforcement literature to organized crime.We model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion. Depending on the principal's information set, threats may or may not be credible. As long as threats are credible, the principal is able to fully extract rents.In that case, the results obtained by applying standard theory of optimal law enforcement are robust: we argue for a tougher policy. However, when threats are not credible, the principal is not able to fully extract rents and there is violence. Moreover, we show that it is not necessarily true that a tougher law enforcement policy should be chosen when in presence of organized crime.