Crime, Inequality, and Unemployment

There has been much discussion of the relationships between crime, inequality and unemployment. We construct a model where all three are endogenous. Introducing crime into otherwise standard models affects the labor market in several interesting ways. For example, we show how the crime rate affects the unemployment rate and vice-versa; how the possibility of criminal activity can lead to wage inequality among homogeneous workers; and how the possibility of crime can generate multiple equilibria in natural but previously unexplored ways. In particular, two fundamentally identical neighborhoods may easily end up with different levels of unemployment, inequality, and crime. The model can be used to study the equilibrium effects of anti-crime policies, such as changes in apprehension rates or jail sentences, as well as more traditional labor market policies such as unemployment insurance.

[1]  R. Sah.  Social Osmosis and Patterns of Crime , 1991, Journal of Political Economy.

[2]  R. Sah,et al.  Social Osmosis and Patterns of Crime: A Dynamic Economic Analysis , 1988 .

[3]  M. Osborne,et al.  Crime, Punishment, and Social Expenditure , 1995 .

[4]  Steeve Mongrain,et al.  Competition in Law Enforcement and Capital Allocation , 2004 .

[5]  Yves Zenou,et al.  Racial Beliefs, Location, and the Causes of Crime , 2000 .

[6]  ON THE POLITICAL ECONOMY OF INCOME REDISTRIBUTION AND CRIME , 2000 .

[7]  Antonio Merlo,et al.  What Accounts for the Decline in Crime? , 2001 .

[8]  Richard B. Freeman,et al.  Why Do so Many Young American Men Commit Crimes and What Might We Do About it? , 1996 .

[9]  A. Tabarrok.  A simple model of crime waves, riots, and revolutions , 1997 .

[10]  Ping Wang,et al.  Crime and Poverty: A Search-Theoretic Approach , 2004 .

[11]  Yves Zenou,et al.  Working Paper No . 601 , 2003 Social Networks and Crime Decisions : The Role of Social Structure in Facilitating Delinquent Behavior , 2003 .

[12]  Bruce A. Weinberg,et al.  Crime Rates and Local Labor Market Opportunities In the United States: 1979-1997 , 2000 .

[13]  P. Diamond.  A model of price adjustment , 1971 .

[14]  S. Cameron.  The Economics of Crime Deterrence: A Survey of Theory and Evidence , 1988 .

[15]  E. Glaeser,et al.  Crime and Social Interactions , 1995 .

[16]  J. P. Shalloo.  Crime in the United States , 1974 .

[17]  Dale T. Mortensen,et al.  Chapter 15 Job search and labor market analysis , 1986 .

[18]  Lawrence F. Katz,et al.  The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths , 1991 .

[19]  Kevin M. Murphy,et al.  Why Is Rent-Seeking So Costly to Growth? , 1993 .

[20]  Dale T. Mortensen,et al.  Wage Differentials, Employer Size, and Unemployment , 1998 .

[21]  Jeffrey T. Grogger,et al.  Market Wages and Youth Crime , 1997, Journal of Labor Economics.

[22]  James Albrecht,et al.  An Equilibrium Model of Search Unemployment , 1984, Journal of Political Economy.

[23]  C. Shapiro,et al.  Equilibrium Unemployment as a Worker Discipline Device , 1984 .

[24]  John Fender.  A general equilibrium model of crime and punishment , 1999 .

[25]  Antonio Merlo,et al.  On the Political Economy of Income Redistribution and Crime , 1996 .

[26]  An on-the-Job Search Model of Crime, Inequality, and Unemployment , 2004 .